HSBC analysts made several rating changes in the pharma sector in a note Monday, initiating coverage of Thermo Fisher Scientific (NYSE:TMO) (price target $610) and Teva Pharma (NYSE:TEVA) (price target $13) with Buy ratings and Danaher (NYSE:DHR) (price target $230) with a Hold rating. The investment bank also downgraded seven stocks and upgraded one.
The stocks downgraded to Reduce from Hold were Bayer AG (OTC:BAYRY), Demant (WILYY), Coloplast As (CLPBF), and United UnitedHealth Group (NYSE:UNH). In addition, AbbVie (NYSE:ABBV), Novartis (NVS), and Sartorius (SUVPF) were lowered to Hold from Buy.
Bayer was cut due to the risk to its dividend, low cash conversion, and litigation overhang.
Demant was downgraded as analysts see the Costco tailwinds and pent-up demand from the pandemic normalizing, "leaving limited upside."
Analysts cut Coloplast on concerns that a "margin recovery may not materialize at a time of increased competition."
The investment bank believes United Health's regulatory risk has increased and is posing a headwind to margins.
For AbbVie, analysts said there is a question regarding the company's capital discipline.
The firm sees limited upside for Novartis after the recent positive share price performance.
Finally, analysts said they see limited upside for Sartorius after the recent performance of its preferred shares over Stedim shares.