Here's why you should consider owning a piece of the British-Swedish pharmaceutical giant AstraZeneca PLC (LON:AZN)...
1. Rumours of a takeover from Swiss pharmaceutical giant Novartis drove the share price higher over the summer months.
As that speculation has cooled, so has the share price, with the bid spec in the stock having all but unwound over the past couple of months.
Although most commentators see a near-term bid as unlikely, it’s not impossible, especially given the weak pound which could tempt one or two firms abroad.
2. In the three months leading up to the US elections, European pharma stocks fell by around 15% on fears that Hilary Clinton was planning to clamp down on drug prices should she have taken the helm.
Astra shares were hit hardest by this pre-election sector sell-off, having slipped by 20% in that same period. To give a comparison, GlaxoSmithKline (LON:GSK) only lost 12%.
City analysts reckon this “unwarranted” decline in the Astra share price now represents a good buying opportunity.
3. Astra has four major immuno-oncology results due in 2017, including from its MYSTIC lung cancer trials, as well as key data on Acalabrutinib, Lynparza and Tagrisso.
Some decent results from any one of those could spark the share price, should see the share price climb north of the £50 level according to one City broker.
“With the stock down around 20% and at lows not seen since late 2013 in dollar terms, we can’t ignore that the risk/ reward going into a rich seam of catalysts in now strongly to the upside,” claims Liberum.
4. Durvalumab is the drug the company – and investors – have the highest hopes for and is intended to be used in combination with other drugs to fight cancer.
Data from the phase III lung cancer trials – known as MYSTIC – are due to start coming through in the first half of 2017.
Most of the City agrees that this key MYSTIC study is riskier than the typical phase III, and is estimated to have less than a 50% chance of success.
If it is successful though, analysts reckon this one drug alone could drive the share price rise towards the £60 mark.
Despite this, the shares are already pricing in failure according to Liberum.
“We think investors are now paying nothing at all for the high-risk but high-potential durva and treme franchise,” said analyst Roger Franklin.
In other words, take a punt, you’ve not got anything to lose.
5. AstraZeneca has increased its divi over the past three years and in March paid out its largest ever final dividend of just under £2 per share.
That’s not too far shy of 5% based on the current share price, which is a decent return on investment.