Bernstein Lists Three European Pharma Stocks as Top Buys, Sector Revaluation Imminent

Investing.com – The European pharmaceutical sector is once again gaining attention as a defensive staple, and Bernstein has clearly outlined its picks. In a recent research report, the broker listed three stocks, believing they offer the most attractive combination of undervalued R&D pipelines, earnings upgrade potential, and revaluation catalysts, with a target price implying a 36% to 53% upside from current levels.

AstraZeneca is Bernstein’s top large-cap pick. Analysts believe the company’s non-oncology R&D pipeline has double-digit earnings upgrade potential, which the market has undervalued. They expect four Phase 3 trial results to be announced in 2026-27, including the rare heart disease project Wainua, with peak sales potential accounting for about one-third of 2025 revenue.

Based on a 10x expected P/E ratio in 2030, Bernstein considers this stock one of the cheapest high-quality R&D engines in the global pharmaceutical industry, and they see a 35% premium over European peers as reasonable.

The stock has risen 21% over the past year, but analysts believe there is still significant room for revaluation.

GSK ranks second among large-cap stocks. Bernstein states that under its CEO, who is the most supportive of innovation in 20 years, the company’s earnings per share could be upgraded by as much as 27% compared to market consensus. They also highlight the Phase 3 trial results of camlipixant for chronic cough as a recent catalyst.

Based on a 9x expected P/E ratio in 2030, trading at a 15% discount to European peers, analysts believe this valuation does not fully reflect the scale of ongoing transformation.

The company’s own guidance of over £40 billion in sales by 2031 significantly exceeds the market consensus of £36 billion. Bernstein believes that R&D milestones over the next 12 to 18 months will narrow this gap.

Argenx is Bernstein’s most confident stock across its coverage universe.

This Belgian immunology specialist will have four key Phase 3 trial results by the end of 2027, including treatments for myasthenia gravis through its Vyvgart product line. According to earnings regression analysis, it is cheaper than US biotech peers.

A target price of €915 implies a 14x expected P/E ratio in 2030, an 8% premium over peer group averages. Analysts say that given the company’s track record, this premium is well justified.

Bernstein praises the management’s substantial investments in diversifying the R&D pipeline, which they believe significantly reduces the risk of the company becoming a single-product biotech unable to offset future patent expirations.

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