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AstraZeneca’s stock is well suited for long-term growth

Story Highlights

The COVID-19 pandemic has brought pharma stocks on the radar of investors – but does Astra Zeneca have what it takes to deliver long-term?

Pharma giant AstraZeneca (GB:AZN) became a globally famous name thanks to its COVID vaccine and is among the biggest companies in the FTSE 100 – not to mention the fact that its stock has generated around 60% returns in the last three years.

Pharma stocks are primarily influenced by the revenue generated by the companies’ drugs. AZN has a strong pipeline of drugs ahead, which could lead to a substantial push in revenues and stock price.

First-half results: Robust growth

The company recently reported its half-yearly results for 2022 with solid revenue numbers. The total revenue for the group increased by 48% to $22.2 billion. The revenues were mainly driven by the biopharmaceuticals segment, which contributed around 47% of the total revenues.

Revenues grew by 31% to $10.4 billion because of solid sales of Farxiga, a type 2 diabetes drug, and other COVID-19 medicines.

The top-line growth led to a solid increase in earnings per share (EPS). The core EPS was reported at $3.61, which was 44% higher than the previous year. The EPS benefited from a core tax rate of 15%. For the second half of 2022, the company expects the tax rate to be in the range of 18–22%.

AZN has increased its full-year 2022 guidance for revenue, considering strong results across the various business segments. Revenue is now expected to grow by a low twenties percentage. Core EPS is expected to rise by a percentage in the mid-to-high twenties.

A diverse and solid pipeline

The company is betting big on its revenue because of a solid pipeline ahead. The company’s pipeline is spread across various stages of clinical trials. It has a total of 184 projects in the pipeline and 17 new molecular entities in late-stage pipeline.

Last month, investors welcomed the news that its asthma drug Tezspire and autoimmune drug Ultomiris had received EU marketing approval. Also, its breast cancer drug Enhertu got a priority review by the U.S. FDA. Enhertu is already approved by the EU for expanded use.

The pipeline shows that the company will continue to be a strong player in the pharma industry for many years to come.

View from the City

According to TipRanks’ analyst rating consensus, AZN stock has a Strong Buy rating from 13 analysts. It includes 10 Buy and three Hold recommendations.

It has an average price target of 11,184.17p, which represents a 3.04% change in the price from the level of 10,766p. The price has a low and high forecast of 15,300p and 1,010p, respectively.

Conclusion

The AZN stock is a gem for investors who prefer stability over fast and high growth.

The company’s guidance numbers and drug pipeline are enough to drive long-term growth in revenues, which will be reflected in the share prices as well.

Disclosure

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