RBC Capital Markets has opened formal coverage on five European pharmaceutical names, elevating Roche and AstraZeneca to Outperform while initiating Novartis, GSK and Sanofi at Sector Perform.
Led by analyst Trung Huynh, the RBC team set a price target of 400 Swiss francs for Roche. The analysts said Roche's core operations are picking up momentum and that its development pipeline contains more upside than current Street models suggest. They highlighted giredestrant, a breast cancer candidate, which RBC views as having $14 billion in potential peak sales compared with a $9.3 billion consensus figure cited by market participants.
"We believe Roche is a quality compounder with sustained growth visibility through 2030+, warranting a premium for its pipeline optionality and a lack of loss of exclusivity (LOE) pressure," the analysts wrote.
For AstraZeneca, RBC assigned a target of 14,500 pence and described the company as presenting the most compelling risk/reward within its European pharmaceutical coverage. The analysts said the stock has been "overly punished" following setbacks such as a failed Wainua trial and the uncertainty surrounding several late-stage readouts scheduled for the second half of 2026. Those developments, they noted, have pushed AstraZeneca's price-to-earnings multiple down to a 10-year low of about 14 times.
"While SERENA-4/AVANZAR will likely keep risk-averse investors sidelined, the setup is favorable: low expectations, modest NPV risk, and unnecessary for AZN’s $80bn target. We expect a swift re-rating once resolved, with the market refocusing on fundamentals with leading growth among EU peers and significant pipeline optionality," the analysts said.
RBC initiated Novartis at Sector Perform with a 120 Swiss franc target. The analysts pointed to recent pipeline disappointments, specifically the failures of pelacarsen and a del-desiran trial, which they said have "dampened momentum and highlight clinical execution risk" relative to the company’s guidance of 5-6% sales growth. RBC models a slightly lower trajectory, forecasting 4.8% sales growth and estimating roughly $13 billion of patent-expiry headwinds by 2030 that the pipeline will need to offset.
GSK was also started at Sector Perform with a target of 1,975 pence. RBC noted that GSK's shares have risen around 30% over the past year on improving fundamentals under chief executive Luke Miels, but warned that current prices already embed those operational improvements. The analysts pointed to competitive pressure in HIV and an approaching patent cliff as constraints on near-term upside from the pipeline.
"Flawless execution through its 2031 ambition is required to bridge the pipeline, while promising, remains a delivery story," the analysts wrote.
Finally, Sanofi was initiated at Sector Perform with an 80-euro price target. RBC characterized Sanofi as a "'show-me' story requiring tangible progress before re-rating," citing recent pipeline failures and a scarcity of near-term catalysts. The bank noted that Dupixent could represent upside for Sanofi if U.S. patent exclusivity extends beyond 2031 as currently expected.
RBC's initial coverage places distinct emphasis on pipeline optionality, clinical execution risk and the magnitude of patent expiries across the group. Roche and AstraZeneca received constructive ratings reflecting perceived upside and valuation dislocation, while Novartis, GSK and Sanofi face headline risks that, in RBC's view, constrain nearer-term re-rating prospects.