AstraZeneca shares set to slump after Covid-19 vaccine trial halted

• AstraZeneca sees Covid-19 vaccine trial halted after patient falls ill
• Jefferies analysts warn that short-term correction of AstraZeneca may prove misplaced
• Race to find viable vaccine heats up among global drug makers

AstraZeneca shares look likely to suffer over the near-term after its Covid-19 vaccine trial was halted due to a patient reacting adversely to treatment.

Following the news, analysts at Jefferies maintained their ‘hold’ rating and left their price target for AstraZeneca unchanged at £80 per share, implying a potential downside for the stock of -4.6%.

And while the US-based investment bank admitted that the pausing vaccine trial with Oxford University may lead to a short-term stock correction, its analysts believe that over the longer term such a move may prove misplaced.

Jefferies’ sentiments are based on the fact that it is considered routine practice to pause clinical trials whenever a patient becomes ill and the action taken was warranted and is largely expected in trials of this nature.

‘We do not currently include sales or ascribe an [net present value] to AZD1222 given uncertainties, but our assumptions imply c.250p/share (3%),’ Jefferies said in a note.

AstraZeneca’s share price will likely bounce back from the recent setback, but the stock has entered into a ‘head and shoulders pattern’, which, if it develops, could see considerable unwinding in terms of the price action that took it to recent all-time highs, according to Jeremy Naylor, analyst and presenter at IG.

WHO says Covid-19 vaccinations not ready until mid-2021

Optimism is high due to the number of vaccinations going to trial at the moment, but the World Health Organisation (WHO) said that many will not be widespread until at least the middle of next year, with many checks required to test the effectiveness and viability of these vaccines.

‘We are really not expecting to see widespread vaccination until the middle of next year,’ WHO spokeswoman Margaret Harris said at a UN briefing in Geneva.

‘This phase 3 must take longer because we need to see how truly protective the vaccine is and we also need to see how safe it is,’ she added.

The race to find a Covid-vaccine

GlaxoSmithKline and Sanofi said that they expect to finalise their first set of results from the trial in early December, with the intention of starting a Phase 3 trial later that month.

‘The initiation of our clinical study is an important step and brings us closer to a potential vaccine which could help defeat Covid-19,’ Thomas Triomphe, executive vice president and global head of Sanofi Pasteur, said.

‘Our dedicated teams and partner continue to work around the clock as we aim to deliver first results in early December. Positive data will enable a prompt start of the pivotal phase 3 trial by the end of this year,’ he added.

Meanwhile, US-based drug maker Pfizer and German outfit BioNTech announced positive results from their pre-clinical trial of their own Covid-19 vaccine after it generated ‘strong anti-viral effects’.

At the moment there are approximately 160 vaccines being trialled around the world by various companies, including Moderna and Gilead Sciences to name just a few.

How to trade stocks with IG

Looking to trade AstraZeneca and other stocks? Open a live or demo account with IG and buy (long) or sell (short) shares using derivatives like CFDs and spread bets in a few easy steps:

1. Create an IG trading account or log in to your existing account
2. Enter ‘AstraZeneca PLC’ in the search bar and select it
3. Choose your position size
4. Click on ‘buy’ or ‘sell’ in the deal ticket
5. Confirm the trade