AstraZeneca PLC (LSE:AZN)’s first-quarter results were thoroughly welcomed by the market. So much so, that its valuation briefly surpassed oil major Shell to become Britain’s most valuation corporation.
With the stock now 26% higher since mid-February, the question is this: Has AstraZeneca peaked, or is there more gas in the tank?
Going by City analysts’ reactions to today’s results, the answer veers towards the latter.
Shore Capital Markets pointed out that despite AZ’s share price momentum, it’s still trading at a historical discount.
Analysts said that “shares have corrected after a disproportionate and overdone weakness” following the full-year results published in February. They are now trading at the peer group average of around 14.8 times price to earnings, but this is still “well below” AZ's historical forward-looking multiple of 18 times.
“We continue to believe a premium is warranted based on its earnings growth and pipeline prospects,” said Shore Cap analysts, giving the stock a 'buy' rating.
“This was an exceptionally strong start to the year for AstraZeneca, in our view, with the company delivering double-digit sales growth across the product portfolio and also realising some operating leverage,” they said.
Jefferies analysts are less bullish with a 'hold' rating, citing margins and growth concerns beyond 2026.
“We argue AstraZeneca is primarily a top-line growth and pipeline story. However, clear aims from management may be needed for stock upside and 2024 has fewer major pipeline catalysts,” they said.
Yet they also noted that “R&D assets outside oncology are largely being ignored, offering significant longer-term upside optionality”, maybe just not in the near term.
AstraZeneca shares were swapping for 11,958p in Thursday afternoon trades. Jefferies has a flat 11,000p price target.