AstraZeneca AZN stock has declined 14% in the past three months. A lot of this price decline is due to ongoing investigations at its China subsidiary. However, the overall drug and biotech sector has also done poorly in the past three months after Trump announced the appointment of Robert F. Kennedy Jr., a vaccine skeptic, as the head of Health and Human Services, the agency that oversees the FDA.
This, coupled with disappointing third-quarter sales and profits, guidance cuts and pipeline setbacks took a toll on the overall drug and biotech industry’s performance.
The decline in AstraZeneca’s stock price and the drug/biotech sector’s downturn have left investors wondering if they should sell AZN stock. Let’s understand the company’s strengths and weaknesses to better analyze how to play AstraZeneca’s stock amid the recent price decrease.
AZN’s Strong Portfolio of Blockbuster Drugs
AstraZeneca boasts a diversified geographical footprint as well as a product portfolio with several blockbuster medicines. AstraZeneca now has 12 blockbuster medicines in its portfolio, with sales exceeding $1 billion, including Tagrisso, Fasenra, Farxiga, Imfinzi, Lynparza, Soliris and Ultomiris. These drugs are driving the company’s top line backed by increasing demand trends. The company is confident that the growth will continue in 2025.
By 2030, AstraZeneca expects to have 25 blockbuster medicines in its portfolio, which is almost double the number of blockbusters it has now. Almost every new product it has launched in recent years has done well.
AZN Enjoys Strong Position in the Oncology Space
Oncology is AstraZeneca’s biggest segment. AstraZeneca is working on strengthening its oncology product portfolio through label expansions of existing products and progressing oncology pipeline candidates. Oncology sales now comprise around 40% of AstraZeneca‘s total revenues and rose 22% in the first nine months of 2024. The strong oncology performance was driven by medicines such as Tagrisso, Lynparza Imfinzi, Calquence and Enhertu (in partnership with Daiichi Sankyo).
A key new cancer drug approval was Truqap for HR-positive, HER2-negative (HR+ HER2-) breast cancer. The drug has seen a robust launch, recording sales of $267 million in the first nine months of 2024. AstraZeneca also has some important oncology candidates in its pipeline, including datopotamab deruxtecan in partnership with Daichi Sankyo, which is under review in the United States for EGFR-mutated non-small cell lung cancer and HR+ HER2- breast cancer.
AZN’s Non-Cancer Pipeline Progress
AstraZeneca has been making significant progress with its pipeline in areas other than oncology, like cardiovascular health, immunology and rare diseases. Some key new drug approvals include Voydeya to treat extravascular hemolysis in adults with the rare disease paroxysmal nocturnal hemoglobinuria, Wainua (in partnership with Ionis [IONS]) for hereditary transthyretin-mediated amyloidosis, commonly referred to as ATTRv-PN and respiratory syncytial virus antibody Beyfortus (in partnership with Sanofi [SNY]). A key pipeline candidate is ALXN-2220, which is being developed for transthyretin amyloid cardiomyopathy.
AstraZeneca is investing in disruptive innovation and transformative new technologies and platforms to discover novel medicines. The company is exploring modalities such as cell, gene and RNA therapies, epigenetics and oligonucleotides to identify new treatment approaches.
In 2024, it acquired small biotechs like Gracell, Fusion Pharmaceuticals and Amolyt to strengthen its pipeline.
AZN Stock’s Price, Valuation & Estimates
AstraZeneca’s stock has declined 4.3% in the past year,underperforming an increase of 2.1% for the industry. The stock has also been trading below its 50 and 200-day moving averages since the end of October 2024.
AstraZeneca Stock Underperforms Industry
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From a valuation standpoint, AstraZeneca appears attractive relative to the industry. Going by the price/earnings ratio, the company’s shares currently trade at 14.08 forward earnings, lower than 15.80 for the industry as well as its 5-year mean of 18.34.
AZN Stock Valuation
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The Zacks Consensus Estimate for 2024 earnings has risen from $4.06 per share to $4.11 per share over the past 60 days. For 2025, earnings estimates have risen from $4.69 per share to $4.70 per share over the same timeframe.
AZN Estimate Movement
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Stay Invested in AZN Stock
AstraZeneca has its share of problems. Recently, there have been rising concerns over the ongoing investigations at its China subsidiary. The Chinese authorities are investigating some current and former AstraZeneca employees at its China subsidiary for medical insurance fraud, illegal drug importation and personal information breaches. The president of its China subsidiary, Leon Wang, has been detained.
Separately, the company expects that its blockbuster diabetes medicine, Farxiga, will be included in China’s volume-based procurement (VBP) plans in 2025, which will affect its sales in China in 2025. This is expected to lead to a substantial decline in the drug’s sales in 2025.
However, the company is confident of continued growth momentum in the Oncology, Rare Disease and CVRM segments in 2025. It expects top-line growth of around 20% in 2025.
Backed by its new products and pipeline drugs, AstraZeneca believes it can post industry-leading top-line growth in the 2025-2030 period. AstraZeneca expects to generate$80 billion in total revenues by 2030. By the said time frame, AstraZeneca plans to launch 20 new medicines, with six new medicines already launched. It believes that many of these new medicines will have the potential to generate more than $5 billion in peak-year revenues. The company is also on target to achieve a mid-30s percentage core operating margin by 2026
Consistently rising estimates indicate investors’ optimistic outlook for growth. Investors who own AstraZeneca’s stock may stay invested as the company shows potential to generate consistent profits. Buying the stock of this fundamentally strong company at its present reasonable valuation can prove prudent for long-term investors who are interested in buying blue-chip companies.
AstraZeneca has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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