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CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

AstraZeneca shares slide while Gilead Sciences soar amid merger rumours

Shares in Gilead Sciences climbed higher on Monday, while UK-based AstraZeneca saw its stock take a tumble after reports of a possible merger between the two companies emerged.

AstraZeneca Source: Bloomberg

Shares in Gilead Sciences climbed 3% higher in early morning trading on Monday, while AstraZeneca stock closed 2% lower after reports of a possible merger between the two companies surfaced.

Gilead Services share price rally was short-lived, however, with the stock trading flat at $77 at the time of publication, while AstraZeneca closed at £82 per share on Monday.

AstraZeneca-Gilead Sciences negotiations fall flat

Last month, the British drug maker AstraZeneca approached the biotechnology company, which is trailing its drug remdesivir as a potential treatment for the Covid-19 virus, only to have its merger proposal shot down.

AstraZeneca’s shares took a tumble in the wake of the deal rumours, with investors left scratching their heads as to why the British drug maker would entertain a deal with such a poor rationale and require a significant amount of capital to complete.

If the merger did go ahead it would combine the two companies efforts in finding a cure for the coronavirus. However, it would likely create a politically sensitive situation whereby each company’s government’s would seek control over any potential vaccine or treatment created by the pair.

‘[Gilead] may be on the verge of having one of the fastest growing products in the industry, if they can successfully establish profitable commercial pricing for remdesivir,’ SVB Leerink analyst Geoffrey Porges told Reuters..

AstraZeneca: JP Morgan reiterates ‘overweight’ rating

Analysts at JP Morgan remain optimistic about AstraZeneca, with the US-based investment bank reiterating its ‘overweight’ rating for the stock and issuing a target price of £84.27 per share, implying a potential upside of 2.7%.

JP Morgan said that there was a ‘low probability’ of a merger between AstraZeneca and Gilead Sciences, with the US government likely resistant to the company being acquired by a foreign drug maker.

However, the investment bank did concede that if the deal were to go ahead it would support AstraZeneca’s earnings.

‘We calculate this would be highly accretive to Astra earnings in the medium-term, with around 50% core EPS [earnings per share] accretion in 2021, 40% accretion in 2022, accretion in the 20s in 2023-25,’ JP Morgan said.

‘In addition, to the EPS accretion, depending on the offer structure, the deal could also allow Astra to de-lever, which in turn could provide more room for pipeline in-licensing.’

How much does it cost to buy UK shares with IG?

There is one way to ‘buy’ UK shares with IG: trading CFDs. The cost will depend on which method you choose. The table below illustrates how the costs to get exposure to £10,000 of Lloyds stock, which is equivalent to 16,000 shares (quoted at 62.5p a share).

Remember, CFDs are derivatives, which come with higher risk and reward than investing.

Cost to get exposure to Lloyds stock

CFD trading
Action Buy 16,000 share CFDs
Capital required to open £2000
Total fees £20.88

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This information has been prepared by IG, a trading name of IG Markets Ltd and IG Markets South Africa Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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