HSBC Downgrades Amgen, Upgrades Novartis in Biopharma Sector Review

HSBC has downgraded Amgen to Hold from Buy and upgraded Novartis to Hold from Reduce, citing a strategic shift towards selective stock-picking in a biopharmaceutical sector where valuations have reached a decade high. The bank's analysts said further outperformance will now depend on medium-term growth prospects rather than defensive rotations out of technology stocks.

In a research note published September 10, analysts led by Rajesh Kumar argued that after a strong rally in the second quarter of 2026, "the next 12 months look less like ‘a rising tide lifts all boats’ and more like bottom-up stock picking." They noted that factors like catalyst quality and operational gearing around patent expirations will separate winners from "value traps."

Key Rating Changes

HSBC's re-evaluation of the sector, which mapped over 100 clinical catalysts through 2027, resulted in several key ratings adjustments.

• Amgen (AMGN): Downgraded to Hold from Buy, with the price target cut to $425 from $445. HSBC stated the stock has already re-rated on strong execution and now trades near its price target, leaving "near-term upside as more limited." The bank sees the upcoming trial readout for its MariTide obesity drug as a key factor in an "increasingly crowded space."
• Novartis (NOVN): Upgraded to Hold from Reduce, with the price target raised to 110 Swiss francs from 95. Analysts believe the "negative catalyst path has largely played out" following recent trial failures, and investor focus will now shift to the forthcoming RECHARGE trial data.

Other Notable Calls

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HSBC also updated its views on other major pharmaceutical firms, maintaining a positive outlook on several names with specific catalysts on the horizon.

AbbVie's Buy rating was reiterated, and its price target was increased to $315 from $300. HSBC anticipates that upcoming pipeline readouts for Skyrizi and Rinvoq could lead management to raise peak sales guidance in early 2027.

Bayer also kept its Buy rating, with its target lifted to €65 from €60. The bank highlighted a favorable U.S. Supreme Court judgment on glyphosate litigation as a potential "meaningful re-rating driver" that could free up capital for pipeline investment.

HSBC's list of preferred stocks includes Buy-rated AbbVie, Johnson & Johnson, Merck, Bayer, and Sanofi. Eli Lilly was named as the firm's least preferred stock in the group, holding a Reduce rating.