Pharmaceutical giant AstraZeneca AZN is making a big play for US investors, and some say, turning its back on Britain. Will the bid for American dollars – and its pipeline of drugs - boost AstraZeneca’s stock?
AstraZeneca recently raised eyebrows – and its stock price - when it an announced it will list shares directly on the New York Stock Exchange.
Will AstraZeneca Delist From London?
Since the news of the listing plan, AstraZeneca stock has jumped 16% and its shares are now up 24% this year. That means AstraZeneca stock is on track for its best performance since 2022.
Though it will retain listings in both London and Stockholm, the move is considered a blow to London.
Investors are concerned that AstraZeneca’s decision could influence other London-listed companies to make a strategic pivot to the US.
Why Is AstraZeneca Backing the US?
This comes as the pharma giant announced in July that it will invest around USD 50 billion in the US by 2030.
The money will go to the creation of a new drug manufacturing facility in Virginia and to expand R&D and cell therapy manufacturing throughout the country.
The move could also help the company dodge the ire of the President Donald Trump, who has moved to impose tariffs on drugs made outside the US.
At the same time, AstraZeneca’s UK chairman has questioned whether the company should continue investing in Britain.
He says the UK government is putting future investment at risk and not doing enough to support new pharmaceutical projects.
But when it comes to the outlook for AstraZeneca stock, it’s not so much the location of the listing that matters, but its drug pipeline and earnings prospects.
What’s the Key to AstraZeneca’s Success?
On this front, AstraZeneca looks strong. Morningstar analyst Jay Lee says the company’s pipeline is one of the strongest in the industry. And some of those drugs could turn out to be blockbusters.
That’s especially true among cancer-battling drugs, Lee says.
Astra is also well-positioned when it comes to respiratory and diabetes treatments, although Lee notes these drugs often don’t have the pricing power of its cancer busting drug products.
Late-stage trials of its experimental drug Baxdrostat have also been successful.
Aimed at patients’ suffering with hypertension, the drug can reduce blood pressure over a 24-hour period .
AstraZeneca says it will soon seek regulatory approval for the drug, with the expectation it will produce around USD 5 billion in annual sales.
Not only that, AstraZeneca made headlines this year by diving into the hot – and competitive - weight loss drug space. It’s going to develop its own product to rival anti-obesity drug Mounjaro by Eli Lily.
When you put it all together, Lee says AstraZeneca looks set to post earnings growth in the low- to mid-single digits for at least then next five years.
In addition, AstraZeneca stock sports a dividend yield north of 2%, which Lee says the company should be able to sustain while still investing in R&D.
Is AstraZeneca Stock a Buy, Sell, or Hold?
But with AztraZeneca stock up so strong this year, are its shares a buy, sell or hold? Lee puts a fair value estimate on AstraZeneca stock at £124.
With a Medium Uncertainty rating and a stock price of roughly £127, that leaves its shares trading in 3-star territory, which means Morningstar sees AstraZeneca as fairly valued.
