Top Line

• We rate AstraZeneca a Strong Buy based on their long term pipeline and breakthrough cancer treatments,

• AstraZeneca is the most prepared to take advantage of a 10% CAGR in the global cancer treatment market,

• We project double digit sales growth of 14-15% for the next two years,

• Cancer segment sales to grow 20% per year thanks to long term pipeline,

• 20% R&D/Sales ensures faster success than competitors.

Breakthrough Cancer Treatments

Cancer treatments have not changed much in the last few decades – chemotherapy and targeted radiation treatments are the still norm for a devastating disease that is responsible for 1 in 6 deaths worldwide. But ADC’s are quickly changing that.

During the last four years regulators in China, the European Union, Japan, and the United States have approved AstraZeneca’s Enhertu, Imfinzi, and Lynparza for the treatment of prostate, pancreatic, lung, liver, biliary tract, and breast cancers. AstraZeneca’s breakthrough treatments are Antibody Drug Conjugates, or ADC’s, which attack cancer cells with targeted antibodies, without the need for radiation or surgery.

Recently, the Food and Drug Administration (FDA) granted approval for AstraZeneca’s Imfinzi plus Imjudo and platinum-based chemotherapy for the treatment of non-small cell lung cancers and inoperable liver cancer.

The regulatory approvals were milestones for a company in an industry that has spent and lost billions developing novel cancer treatments. Pfizer's leukemia ADC fizzled out in the early 2000s. AbbVie's $5.8B purchase of Stemcentrx and Gilead Sciences' $21B acquisition of Immunomedics have yet to yield any profitable results. 

AstraZeneca faced challenges in 2023, experiencing a 0.7% decline to $67.35. While part of this performance can be attributed to industry headwinds, such as the modest gains in the SPDR S&P Pharmaceuticals ETF, the company's own issues, including slowing sales of its Covid-19 vaccine and disappointing trial data for a lung cancer treatment in October, contributed significantly. AstraZeneca's stock underperformed during the November market rally.

However, a more favorable outlook is anticipated for 2024. Consensus estimates project double-digit earnings growth for the company, approximately 14% and 15% in 2024 and 2025, respectively.

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