Shares of Sandoz Group (SIX:SDZ) were up after Barclays (LON:BARC) initiated coverage with an “Overweight” rating and a CHF 45 price target. The brokerage’s positive outlook on the company hinges on its Generics business and the potential of its Biosimilars division.
Barclays analysts view Sandoz's Biosimilars pipeline as a key growth driver. The recent successful launches of biosimilars, coupled with a robust product pipeline, positions the company for substantial revenue growth.
“We see a better product mix, operational improvements and organizational efficiencies leading to margin expansion,” the analysts said.
The pharmaceutical company's strong cash generation and favorable debt profile provide a solid foundation for both organic and inorganic growth.
Despite the stock's impressive performance since its spin-off from Novartis (SIX:NOVN), Barclays flags there's ample room for further upside. The company's valuation appears “undervalued” compared to its peers.
The market will closely monitor Sandoz's trajectory as several catalysts, including a strategic review investor event and the launch of additional biosimilars, are on the horizon.
While the report flags the company's growth potential, it also acknowledges inherent risks such as heightened competition, pricing pressures, and regulatory challenges.