(BFM Stock Exchange) – The strategists of the German bank have gone from “under -ponder” to “overlap” in the sector this Friday, believing that uncertainty on customs duties is lifted enough to return to the compartment.

Investors see it a little clearer. For several months, the Trump administration has threatened to establish astronomical customs surcharge on imports of European drugs.

The American president himself brandished aberrant figures, evoking a rate of 200% or even 250%.

Which is obviously far from trivial for European pharmaceutical groups. As an example, Sanofi achieves about half of its sales in the United States.

Customs duties will ultimately be much more moderate. On Thursday, the United States and the European Union published a joint declaration allowing to formalize and complete the agreement made at the end of July between Donald Trump and the president of the European Commission, Ursula von der Leyen.

According to this “joint statement”, pharmaceuticals exported from Europe to the United States will have customs duties of 15%.

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A Decoked Sector

The announcement did not cause a really notable stock market reaction. However, in a note published this Friday, Deutsche Bank strategists believe that it is time to return to the European pharmacy. Bank’s experts have thus noted their opinion, going from “sub-ponder” to “overlap”, which amounts to “sell” to “buy”.

Strategists believe that the joint declaration between Washington and Brussels “considerably reduces uncertainty for pharmaceutical companies”. “As we have noted previously, we consider that better visibility on customs duties is a probable purchase trigger for the sector,” added the German bank.

“This is the sector which represents most of the European Union exports to the United States and it was one of the two most important sectors of European stock markets before underperforming the Stoxx 600 (a large pan-European, editor’s note) of 14% since the beginning of the year,” observes Deutsche Bank.

“The risk reduction linked to customs duties, inexpensive valuation, solid prospects for growth in profits and prudent result estimates offer, in our view, an attractive increase in the sector,” continues the establishment.

Deutsche Bank observes that the European pharmaceutical sector is currently displaying a 13% discount compared to its historic average over 10 years. This while the consensus awaits an average increase in profit per share of 7% of the compartment this year, against 0% for the entire Stoxx Europe 600.

Uncertainty on the Swiss

UBS drawn up a similar observation last week. The Swiss bank noted that large European pharmaceutical groups were exchanged with a 20% discount compared to their average valuation over 10 years (based on the stock exchange on the value of net assets, an accounting indicator).

UBS believed that a large part of this discount was due both to fears about customs duties as well as a drop in drug prices in the United States.

The establishment considered that an advertisement on customs duties of 15% for pharmaceutical products would constitute a “clearing event”, that is to say a welcome clarification.

The Swiss bank considered that Astrazeneca, Sanofi and Roche were less exposed to American customs duties than other groups in the sector.

Important precision, however: for Roche, Sandoz and Novartis, Swiss groups, the situation is still unclear. Washington inflicted 39% customs duties at the end of August, but these customs surcharges are excluding pharmaceutical products at least.

However, Swiss groups “represent 36%” of the stock market sector in Europe, notes Deutsche Bank.

Since the start of the year, the “Stoxx Europe Total Market Pharmaceuticals” index has lost 5%. This pan-European sectoral index is in reality mainly sealed by the fall of Novo Nordisk (-41.5%), which has delivered results of disappointing clinical trials and issued several warnings on results, and to a lesser extent by decreasing Sanofi (-5.8%).

The French group notably crumpled the market in the last season of results by publishing a net profit by lower action than expectations.

Last week, the JPMorgan bank went to “overcome”, equivalent to buying, on the value. The American bank notes that Sanofi should publish positive results for clinical studies for two candidates medication, namely amlitemab (treatment of atopic dermatitis) and tolebrutinib (multiple sclerosis), in the second half.