Investing.com -- RBC Capital Markets upgraded Sandoz Group AG (SIX: SDZ ) to “outperform” from “sector perform,” maintaining its CHF 44 price target, which implies 24% upside from the current share price of CHF 35.78, in a note dated Friday.

The upgrade reflects renewed confidence in Sandoz’s biosimilar portfolio, management’s reassurances on tariff exposure and the stock’s valuation discount relative to peers.

Despite slower-than-expected growth in the first quarter, RBC expects sales to accelerate as new biosimilar launches, including denosumab in the U.S., gain traction.

Sandoz is the only company with a Q-code at launch, improving its reimbursement positon. The product has already captured 30% market share in Canada.

Concerns about potential tariffs were addressed by management, who indicated that even a broad 20% tariff would result in an estimated $60 million to $65 million annual cost, which the company expects to offset. RBC noted these risks appear manageable and unlikely to derail growth plans.

Sandoz trades at 11.5 times forward earnings and 8.4 times forward EV/EBITDA, valuations RBC sees as unjustified given projected double-digit earnings growth.

The brokerage values the stock using a discounted cash flow model with a cost of equity of 8.5% and a 2% terminal growth rate.

The brokerage also flagged margin expansion potential, with EBITDA margins expected to rise from 21% in 2025 to up to 26% by 2028, driven by operational efficiencies and portfolio mix improvement.