Investing.com -- HSBC adjusted ratings and target prices across its biopharma coverage, citing "a lower sector additional risk premium" following a rally in the second quarter of 2026.

Analysts led by Rajesh Kumar said pharma multiples are at a decade high, and further outperformance will require a medium-term growth upgrade rather than "defensive positioning in out of AI/Tech rotation." The team mapped and scored more than 100 clinical catalysts through 2027 across its coverage universe.

"The next 12 months look less like ’a rising tide lifts all boats’ and more like bottom-up stock picking," the analysts wrote, adding that catalyst quality, franchise adjacency, and loss-of-exclusivity operational gearing will separate winners from value traps.

HSBC upgraded Novartis to Hold from Reduce, raising its target price to 110 Swiss francs from 95, after "back-to-back trial failures for pelacarsen and del-desiran." The analysts said they expect a near-term consensus downgrade cycle, but believe "the negative catalyst path has largely played out," with investor focus shifting to the upcoming RECHARGE trial readout.

Amgen was downgraded to Hold from Buy, with the target price cut to $425 from $445. HSBC said the stock has "re-rated on strong operational execution and positive estimate revisions" and now trades close to its target price, leaving "near-term upside as more limited." The analysts flagged that the company’s re-rating over the next 12 months will hinge on the MariTide obesity trial readout, an area they described as "an increasingly crowded space."

The broker also retained its Buy rating on AbbVie and raised its target price to $315 from $300. The analysts said pipeline readouts for Skyrizi and Rinvoq could let management raise peak sales guidance in early 2027, potentially shifting 2027-31 growth rates "from low mid-single digit to high mid-single digit."

Bayer also kept its Buy rating, with the target price lifted to €65 from €60. HSBC pointed to a "favourable judgement from the US Supreme Court" on glyphosate litigation and said a September 2026 class-action resolution "could be a meaningful re-rating driver," potentially freeing capital for pipeline reinvestment.

HSBC’s preferred stocks include Buy-rated AbbVie, Johnson & Johnson, Merck, Bayer and Sanofi, while Reduce-rated Eli Lilly was named the least preferred name in the coverage group.