AstraZeneca's [AZN] share price has benefitted from the race to find a vaccine for the coronavirus (COVID-19). Now, with a possible treatment undergoing trials, it is moving one step closer to a working vaccine. Results from phase one trials are due to be published this week and should provide insight on the vaccine’s progress.
Positive trial results could see AstraZeneca's share price gain further. So, is now the time to back the drug manufacturer, or is a potential vaccine already accounted for in its current price?
What's happening with AstraZeneca’s share price?
AstraZeneca’s share price has been impacted recently by its partnership with Oxford University with the aim of developing a vaccine for COVID-19. Known as AZD1222, the vaccine is currently being tested on human subjects, and early-stage trial data will be published in medical journal The Lancet on 22 July.
These results will be a good indicator of whether or not the vaccine is safe, and the exact nature of the response it provokes from the immune system.
What does this mean for AstraZeneca's share price?
AstraZeneca's share price jumped 4% on Friday 17 July, as investors hoped for good news from the trials. As the Evening Standard points out, this gain alone was big enough to add 18 points to the FTSE 100.
Through 17 July’s close, AstraZeneca's share price is up almost 20% year-to-date, as shareholders bet on the company producing a successful vaccine. Since the start of April, the stock has rallied following the mid-March, market-wide dip as the vaccine undergoes its final-stage trials. If the results prove positive, AstraZeneca's share price could see further upside. AstraZeneca’s strong financial performance across the business is also giving investors reason to be hopeful.
AstraZeneca's YTD share price rise
What else could move AstraZeneca’s share price?
In Q1 2020, AstraZeneca’s share price saw a bump in revenue and profit due to its strong product pipeline and the reception of new treatments. The quarter saw the pharmaceuticals giant report $6.3 billion in revenue, up 17% from the same quarter last year. Reported earnings per share came in at $0.59, up 27% from last year.
Promisingly, revenue from new medicines drove growth, seeing an incremental $1 billion increase compared to the previous year. AstraZeneca said that full-year guidance was unchanged, with forecasts for earnings per share to increase by a mid- to high-teens percentage.
“Our focus ensured another quarter of strong growth across every therapy area and region. The new medicines performed extremely well, and our pipeline continued to deliver. Standouts included landmark news for Tagrisso, Farxiga and Koselugo, our latest oncology medicine. The progress made on all fronts provides confidence that we will, once again, meet our full-year commitments,” Pascal Soriot, Chief Executive Officer, commented.
Shareholders will now be eagerly watching for AstraZeneca’s half-year 2020 results on 30 July. These should provide an update on its coronavirus treatment and wider product pipeline. Another strong showing could drive the share price higher.
“The new medicines performed extremely well, and our pipeline continued to deliver. Standouts included landmark news for Tagrisso, Farxiga and Koselugo, our latest oncology medicine. The progress made on all fronts provides confidence that we will, once again, meet our full-year commitments” - Pascal Soriot, AstraZeneca CEO
So, is it time to buy AstraZeneca?
Despite the surging share price, analysts seem unsure whether there's more upside left. AstraZeneca has an average 9008.92p price target from the analysts tracking it on the Financial Times. Hitting this would represent a near 2% downside on the current share price (through 17 July’s close). Of the 27 analysts offering recommendations, 8 rate the stock a Buy and 11 Outperform.
Whether or not AstraZeneca's share price does drop slightly in the short-term, the pharmaceutical company remains a high-quality defensive stock. Over the past five years, it's up circa 112%, and carries a 2.47% forward dividend yield. Considering that the economic fallout from the outbreak could get worse before it gets better, AstraZeneca could provide any portfolio with a degree of resilience.
|PE ratio (TTM)||80.37|
|Quarterly Revenue Growth (YoY)||15.7%|
AstraZeneca share price vitals, Yahoo Finance, 20 July 2020