Opinions
Jamie Murray 
Astrazeneca P L C
AZN-N
TOP PICK
Feb 16, 2024
Stock price when the opinion was issued
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Is overlooked in pharma. It boasts an amazing oncology business, including recent positive trial data on phase 2 and 3 lung cancer drugs, which could be breakthroughs. Shares have doubled in the last 5 years and has been climbing since 2016. Last April they delivered a blowout quarter with an earnings beat and a bullish forecast including a 8.5% compound annual growth rate based on doubling multi-billion drugs to 25 by 2030. Also, they are developing obesity drugs.
Very strong R&D pipeline, with new products expected. Off recent share price highs, which is a good time to buy. Margins very strong on new products. Expecting earnings to rise in the immediate future. Low double digit EPS @ 16x earnings a very strong value proposition. Will continue to hold for the long term.
The big pharma is developing a GLP-1 weight loss treatment that avoids injections -- a big game changer - and trials are looking good. The stock trades at 32x earnings and supports a 16% ROE. We recommend setting a stop-loss at $52, looking to achieve $88 -- upside potential of 30%. Yield 2.2%
(Analysts’ price target is $88.01)We reiterate AZN as a TOP PICK. Recently reported earnings indicated a 19% increase in earnings and revenues. Management announced positive development on 9 new drugs worth $5 billion in future revenues and a plan to invest over $800 million in Ontario creating 700 jobs. The shares trade at 18x earnings and support a 30% ROE. We recommend trailing up the stop (from $52) to $64, looking to achieve $88 -- upside potential of 21%. Yield 1.4%
(Analysts’ price target is $88.24)They rallied last summer, then faced headwinds last fall when a cancer drug failed to perform in trials and there was an investigation in their large Chinese business. Both problems are clearing now. They have a drug pipeline that should become a great growth story. Trades at 15x PE.
Highest growth rate in Pharma sector given current share price. Very attractive entry point (15x earnings). Leader in oncology channels. Chemotherapy products very strong and is a leader in R&D. Good long term hold.