Opinions
Bruce Murray
Astrazeneca P L C
AZN-N
TOP PICK
Mar 19, 2024
Stock price when the opinion was issued
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Premium contentWe 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.
Premium contentPremium contentOur PAST TOP PICK with AZN has triggered its stop at $71. To remain disciplined, we recommend covering the position at this time. This will result in a net investment gain of 1%, when combined with our previous guidance.
Likes the pipeline. A number of candidates to seek approval in the next couple of years, which will be a catalyst for earnings going forward. Fairly productive R&D engine. Also growth through tuck-in acquisitions. Relatively attractively priced given current growth outlook. Going to be second-fastest growing drug stock in Europe behind NVO. Yield is 3.06%.
(Analysts’ price target is $85.38)In oncology, but he isn't deeply familiar with its product pipeline. He can say, with quite a bit of confidence, that they've been improving on fundamentals since around 2017-18. ROC marched up from 6% to 13%, very consistent. Pretty good valuation at 13x EV/EBITDA. Well run.
He doesn't get too hung up on a weak couple of years. If the fundamentals are there, you just have to wait it out.
They focus on cancer drugs and making massive inroads. AZN just bought Alexion, which seeks drugs for rare diseases, so the target markets are there. AZN sells at 15x PE with earnings to grow 5-10%. Dividend pays 3.5%.
(Analysts’ price target is $83.88)