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Are Astrazeneca shares A Worthy Buy?


October 26, 2020
Are Astrazeneca shares A Worthy Buy?

With the sudden outbreak of the coronavirus, it came as no surprise that multitudes of investors shifted their interests to Astrazeneca shares. Not only is the company one of the largest ranking pharmaceuticals in the U.K., but it is also underway in developing its own candidate for the coronavirus vaccine. If successful, it stands to make immense profits.

 

But before you jump into the merry band by investing in the firm, it is important to know if it is actually worth it. Here is a brief guideline on what to expect based on the most recent Astrazeneca news, together with current trends facing the industry.

 

Is It A Good Time To Buy AZN shares?

 

Since the stock market crash in March, most companies have seen a drop in their stock value. However, pharmaceutical giants like Astrazeneca have come out of the predicament as equity market winners. Seeing as the Astrazeneca share price saw a 39% rise in just one month, it might be safe to consider it a worthy investment as of now.

 

The company is also currently working in conjunction with the University of Oxford to manufacture its own vaccine candidate, the AZD1222. The vaccine is doing quite well, now earning a spot in the top five coronavirus vaccine candidates within the 3rd phase of testing.

 

Astrazeneca’s Share Price GBP

 

On a more comprehensive analysis, Astrazeneca share price today has produced quite encouraging numbers. They’ve gone up 12.5% in the year as the market gained 8.2% as per SPDR S&P 500 ETF. Based on technical analysis, the company’s last close in the market was 8109p (5.17% up). This is a significant improvement to the 7690p (38.12%) before the crash. Over the past year, the share price was trading at an average of 4249. It hit an ultimate high of 10120, and 5871 at its lowest.

 

The current AZN share price LSE or Lon AZN (London Stock Exchange) value is listed at $0.25. It also has a market capitalization of about £102,921 from the 1,312 shares in issue.

 

Real-time ratings based on technical indicators like oscillators, picots, and moving Averages show that the AZN stock will continue to see an improvement over time. Despite this, the company still boasts of a $146 billion value to its name, which is comforting to investors.

 

Is It Worth Buying AZN shares?

 

Judging by its current ridiculously heightened price-to-earnings ratio, it would be right to say that the AZN shares are a worthy buy. With an earnings multiple of 104, stocks in the company may very well be one of the best in the market. You see, the price-to-earnings ratio (P/E) is usually measured by dividing a business’s current stock price by the earnings-per-share. Therefore, if a company’s earnings increase, its P/E usually reduces.

 

But the P/E can also be influenced by purchases made on stock. When many investors buy stock, the share price goes up, driving the P/E up as well. This is exactly what happened with Astrazeneca’s shares. The fact many investors are buying stock only shows the company’s potential.

 

Besides its potentially profitable vaccine, you also have to keep in mind that Astrazeneca is still a leading company with stable growth and consistently growing revenue. The company boasts of a fantastic catalogue of other drugs that are bringing in healthy figures in the market. Its shares last year, before the pandemic, gained up to 31.2%, which came on top of the market’s 29% growth.

 

Safe to say, even with the high price to earnings ratio, investing in shares should prove profitable in the long term, with or without the success of the vaccine.

 

Is Astrazeneca A Good Stock To Buy?

 

With its current impressive track record, the Astrazeneca stock has indeed proven a good stock to invest in. But, to be fair, most coronavirus vaccine developers’ stocks have been on a rapid rise this year. In fact, if you made a distributed investment in the top five most outstanding developers this time, your holdings would have gone up to about 164.68% through the course of just 7 months.

 

Because of this, there might not be room for all the players in the trade to succeed. For the vaccine to be deemed safe, it has to go through evaluations by the U.S Food and Drug Administration (FDA). And even so, it might not perform as well on a commercial scale.

 

The developers would likely generate their billions of dollars in the first few years and then see their revenues decline dramatically as a large section of the population becomes immunized, and the market becomes saturated with newer, more improved vaccines.

 

However, Astrazeneca’s EPS growth (earnings per share) is generally on an rise. For the quarter ending June 30, it was $0.29, which was a 47.6% increase.

 

Astrazeneca And Competition: COVID Vaccine Progress?

 

Compared to its competitors, Astrazeneca has a pretty solid chance of coming up with a viable coronavirus vaccine. It has reached an impressive stage 3 in trials with a forecast annual production capacity of 2 billion.

 

But even so, it might not be entirely safe to bank on the vaccine. Even though it manages to develop the first viable vaccine, a more effective vaccine developed by another company could easily overthrow it.

 

However, Astrazeneca still has a couple of other tricks that make it stand out among its rivals. They include:

 

  • The company’s reliance on multiple highly-rated franchises

You see, while most drug makers only specialize in one area of expertise, Astrazeneca broadens its scope to multiple promising franchises. Other than its soaring oncology drugs with half-yearly sales growth of up to 27%, the company also has a cancer drug called Tagrisso. This currently generates up to 16% of its revenue.

 

Other promising champions include Lynparza and Imfinzi, which have been garnering some force in the market.

 

  • The company’s wide array of potentially successful drugs

Analysts on wall street predict that Astrazeneca will increase its earnings by an annual rate of 19% in the next five years. You can attribute this to its current lineup, as well as its array of potential winners.

 

With up to 166 programs underway and two dozen of them in the 3rd phase of clinical trials, Astrazeneca is on the way to generate massive revenue in the near future. Not to mention its COVID-19 candidate, that shows quite promising results.

 

  • Has a high dividend yield

The pharmaceutical company’s stock has, over the last 10 years, nearly doubled the return on its stock. This has, in turn, seen a high increase in share-price appreciation due to reinvested dividends. At 2.5%, Astrazeneca dividend is outstanding as it is, yet it only continues to increase.

 

Does Astrazeneca Stock Pay Dividends?

 

The Astrazeneca stock is considered one of the most reputable dividend stocks out there. The company has been consistently paying dividends through the last decade, giving it a pretty healthy track record. Astrazeneca currently has a 2.5% dividend yield, which superseded the S&P 500’s 1.6% dividend yield average. This, by any standard, qualifies as a really good buy, more so with the current coronavirus situation.

 

Also, if you consider Astrazeneca’s wide range of medicines and other projects, you get the potential for increased dividend yields in the long term. The company relies on a highly scalable and capital-light business model, which has, in recent times, helped deliver consistency in high sales.

 

The sales have reached near-70% percent margins, raising shareholder returns. In 2019 alone, Astrazeneca returned upward of 150 million euros to its shareholders in buybacks and dividends.

 

The Major Reasons for Concern On AZN Shares

 

As with any other stock, you can expect some level of risk with AZN shares. The downside with pharmaceutical companies is that they are always challenged by a variety of factors. Other than the highly competitive marketplace, an economic backdrop such as the one currently being experienced can significantly influence share price volatility. There are also the risks of failed trials, adverse reactions to the medications, and the ever-demanding costs in development and research programs.

 

But Astrazeneca still proves its worth. The company’s opportunities outweigh the risks by a decent margin. With its world-leading R&D department, Astrazeneca is technologically equipped to break down most of these barriers.

 

The company pumps a lot of investment into research, which results in handsome pay-offs as they discover groundbreaking technology. You can expect the same level of investment in its current brainchild, the AZD1222 coronavirus vaccine.

 

Takeaway for potential Astrazeneca investors

 

At the moment, the discovery of the COVID-19 vaccine plays one of the most fundamental roles in stocks’ success. However, much as Astrazeneca shows promising progress in development, there are still bottlenecks, making the economics of the vaccine unpredictable. Not to mention the vast number of companies competing in the limited market.

 

Therefore, as you make your investment decision and debate on the Astrazeneca shares buy or sell question, it is vital that you take into consideration the company’s ability to promise growth without relying on that one vaccine. Feel free to pass this information on to your fellow investors as you have your AZN share chats, or on social media to keep them up to speed. Also, check out our review on a few other Uk stocks to buy.


Disclaimer: This article is not investment advice or an investment recommendation and should not be considered as such. The information above is not an invitation to trade and it does not guarantee or predict future performance. The investor is solely responsible for the risk of their decisions. The analysis and commentary presented do not include any consideration of your personal investment objectives, financial circumstances or needs.

Risk Warning: Our products are traded on margin and carry a high level of risk and it is possible to lose all your capital. These products may not be suitable for everyone and you should ensure that you understand the risks involved.

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