AstraZeneca shares (LSE:AZN) are not far from their 12 month highs as the global pharma and biosciences giant sees near unprecedented interest in its stock. This is not surprising as the main question of the day involves a major global pandemic, and regardless of breakthroughs elsewhere in the sector, governments are likely to be turning to the drugs behemoths for final delivery of anti-virus solutions.
Following a short, sharp sell off that saw AstraZeneca stock fall from £75.02 to £62.21, the shares have staged a major recovery, adding 22% since 16 March, a few days before the UK imposed its lockdown. At that point European governments were beginning to wake up to the full implications of the coronavirus and starting to batten down the hatches.
AstraZeneca has put on plenty of value just as investors were selling out of most other sectors. The big question is whether it can break that 52 week barrier? We would argue that, yes, this is its time to shine, and here’s why.
The company is close to trading at all time highs, and in normal times, we would say that maybe the market was becoming over-enthused, but these are not normal times, and a multi-national pharmaceutical giant on this scale has to play a big role in the fight back against COVID-19, which will likely include plenty of government help in supporting the delivery of its products.
Some fund managers also like AstraZeneca for its defensive qualities during times of economic slowdown, and we are certainly heading for one of those this year. Investors will need to be much more careful which stocks they pick.
Aside from COVID-19, AstraZeneca has also been working on other treatments: while the world has become obsessed with coronavirus, there are other killers out there, and AstraZeneca has been working on trials of a lung cancer treatment. It recently stopped a trial of its latest post-operative lung cancer suppressant, well ahead of schedule, which analysts are taking as positive news that the treatment has worked.
AstraZeneca is already a major force in the lung cancer treatment market via its existing Tagrisso product.
Several analysts have AstraZeneca as a buy recommendation, including Liberum, which upped its target price for the firm to £88.70 from £88.10. Liberum says it likes AstraZeneca’s pipeline of drugs into the oncology space which should allow it to expand its overall product sales and boost revenues.
AstraZeneca has been an excellent long term buy and hold for investors. You could have had it for £50 in 2016. It is not cheap, and it won’t make you a huge amount of money, but as stocks go, you could do a lot worse if you want to weather the storms ahead than one of the big names in drugs development and manufacturing.
Add in COVID-19 and the need to manufacture treatments for the virus at a truly astronomical level and there are not many places for governments to turn. AstraZeneca ranked 13th in the world in 2019 in terms of total revenues (£24.28bn), and while not as large as a Sanofi or a Novartis, we don’t see it doing poorly over the next 12 months.