2 Key Reasons Morgan Stanley Upgraded Alexion Pharmaceuticals

Analysts at Morgan Stanley upgraded Alexion Pharmaceuticals, Inc. ALXN Thursday despite the stock's 17-percent loss year to date and two management shake-ups in the past six months alone.

Morgan Stanley's Matthew Harrison upgraded Alexion's stock rating from Equal Weight to Overweight with an unchanged $138 price target for two supporting reasons.

1. New Management Team

Although Alexion's two management shake-ups have been a source of concern for investors, the analyst believes the management team in place can "re-prioritize the strategic direction" of the company. Furthermore, the second-quarter strategic review serves as a "turning point" for investor sentiment.

"While we understand investor unease that another 'shoe could drop' on this story, we see the risk/reward as compelling and believe new management is making progress right sizing the company and refocusing its efforts," the analyst wrote.

2. Underappreciated Story

Harrison also believes Alexion's stock is pricing "little-to-no value" for the ALXN1210 life-cycle extension strategy. Meanwhile, investors are under-appreciating the antibody but the sentiment could turn move positive with potential gMG approval and the release of pivotal data.

Harrison also believes Alexion's core asset value is "not impaired." Also, the analyst suggested that the underlying patient need and use of Solaris is "sound" and the company's strategy to protect Solaris through new IP and ALXN1210 is "very defensible with clarity on this strategy coming in less than 12 months."