The AstraZeneca share price is rising fast. Here’s what I’d do now

The AstraZeneca share price is rising fast after its robust results. But can it rise much further from its already elevated levels?

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Covid-19 vaccine maker AstraZeneca (LSE: AZN) has had its fair share of troubles in the past few months. But I reckon that is about to change now. In fact, it may already have done so. 

The AstraZeneca share price is up 3.5% in today’s trading, currently the biggest FTSE 100 gainer. The jump follows a strong performance in the first quarter of 2021. 

AstraZeneca sees sharp growth and robust outlook

Its total revenue increased by 15% to $7.3bn. This was partly driven by vaccine sales. But even without this, it saw an 11% revenue rise to $7bn.

AstraZeneca also reported a sharp increase of 72% in pre-tax profits and earnings per share (EPS) doubled.

These are great results, and continue to add to the pharmaceuticals biggie’s financial strength. 

Its guidance was robust too, with revenue expected to rise by “a low-teens percentage”. It also expects faster growth in core-EPS to $4.75-$5. For Q1 2021, the number was at $1.63. 

Consider the fine print

However, I think it is worth bearing in mind that the sharp jump in profits is largely because of its divestment of 26.7% of Viela. US-based Viela is a spin-out from AstraZeneca that develops treatments for autoimmune and severe inflammatory diseases. This added $776mn to other operating income but that profits spike is unlikely in the future given the divestment. 

Further, its acquisition of US-based Alexion Pharmaceuticals is expected to complete only in the third quarter of this year. While I do not think AstraZeneca’s financials raise questions of how it would finance the deal, that it is happening in an uncertain period is something to consider. 

Vaccine matters

Additionally, the Covid-19 vaccine continues to stay in the spotlight for a variety of reasons. There have been doubts about the vaccine’s effectiveness against coronavirus variants. Reports of blood clots as a vaccine side-effect are also a downer. As is AstraZeneca’s alleged inability to uphold its agreement to supply vaccines to the EU

Outlook for the AstraZeneca share price

On balance though, I think there is much to be optimistic about regarding the AstraZeneca share price. Even with the ongoing vaccine-related challenges, the company has a strong pipeline. 

Its cancer treatments segment grew by 20% this quarter and trials of its new cancer treatments are showing positive results. This is significant because the segment accounts for over 42% of revenues.

Also, its share price at £76.6 is still 8% lower than last year’s highs, because of the improved relative attractiveness of Covid-19-affected stocks. After the stock market crash of last year, investments flowed towards ‘safe’ stocks like AstraZeneca. But as the initial lockdowns were lifted, followed by vaccine development, it lost its lustre. Additionally, the company has been battling its own issues, as mentioned earlier. 

But it is rising once again. With its positive forecasts and hopefully a durable victory over the pandemic, I think it will continue to. It is a buy for me. 

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Manika Premsingh owns shares of AstraZeneca. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

Could the JD Sports Fashion share price double in the next five years?

The JD Sports Fashion share price has nearly halved in the past five years. Our writer thinks a proven business…

Read more »

Bus waiting in front of the London Stock Exchange on a sunny day.
Investing Articles

If interest rate cuts are coming, I think these UK growth stocks could soar!

Falling interest could be great news for UK growth stocks, especially those that have been under the cosh recently. Paul…

Read more »

Investing Articles

Are these the best stocks to buy on the FTSE right now?

With the UK stock market on the way to hitting new highs, this Fool is considering which are the best…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Can the Centrica dividend keep on growing?

Christopher Ruane considers some positive factors that might see continued growth in the Centrica dividend -- as well as some…

Read more »

Smiling family of four enjoying breakfast at sunrise while camping
Investing Articles

How I’d turn my £12,000 of savings into passive income of £1,275 a month

This Fool is considering a strategy that he believes can help him achieve a stable passive income stream with a…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

2 top FTSE 250 investment trusts trading at attractive discounts!

This pair of discounted FTSE 250 trusts appear to be on sale right now. Here's why I'd scoop up their…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

3 things that could push the Lloyds share price to 60p and beyond

The Lloyds share price has broken through 50p. Next step 60p? And then what? Here are some thoughts on what…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

£1,000 in Rolls-Royce shares a year ago would be worth this much now

Rolls-Royce shares have posted one of the best stock market gains of the past 12 months. But what might the…

Read more »