AstraZeneca share price outperforms healthcare rivals GSK and PureTech

After making strong gains during the coronavirus pandemic, biotech stocks have fallen from their highs in 2022. However, AstraZeneca has performed particularly well compared with its peers GSK and PureTech Health so far this year, helped by strong Q2 revenues.

Pharmaceutical and biotech companies AstraZeneca [AZN.L], GSK [GSK.L] and PureTech Health [PRTC.L] were pushed into the spotlight in 2020 as the world turned to healthcare companies to pull the world out of the pandemic. As the industry adapts to a post-Covid-19 world, companies are looking for opportunities in areas such as rare diseases.

Biotech stocks have struggled to make gains so far in 2022, with the iShares Biotechnology ETF [IBB] down 17.6% since the start of the year (through 22 August). There have been concerns that the pandemic pushed up valuations in the sector to prices that couldn’t be back by fundamentals.

However, some companies have still been able to perform well this year despite the challenges. The sector has received a boost in recent months thanks to a flurry of M&As as smaller firms with lower valuations became attractive targets for larger companies.

GSK has jumped on this trend, acquiring clinical-stage US company Affinivax for $3.3bn in a deal that was completed on 16 August. Helped by the recent wave of activity in the biotech sector, the iShares Biotechnology ETF gained 2.4% in the past month.

AstraZeneca beats analysts’ expectations

AstraZeneca has been one of the best performing stocks not only within the pharmaceutical industry but also within the FTSE 100. As of 22 August, the share price has risen 34.9% since the beginning of 2022, while the FTSE 100 is up just 1.9% over the same period.

At the end of July, the British-Swedish company reported strong second quarter results as sales remained high for its Covid-19 antibody treatment, as well as its drugs to treat cancer and rare diseases. It reported revenue of $10.8bn, surpassing analyst expectations of $8.7bn. AstraZeneca’s oncology sector reported particularly strong growth, with revenue up 20% year-over-year to $3.8bn.

Sales for AstraZeneca’s Covid-19 antibody treatment Evusheld were $445m for the quarter. The treatment helps to protect people from the virus who do not respond well to vaccines. The company has received contracts for Evusheld from several major markets including the US, EU, Canada and China, and sales are expected to rise in the second half of the year.  

Analysts share an optimistic outlook on AstraZeneca shares. Out of 32 analysts polled for the Financial Times, eight gave a ‘buy’ rating, 18 ‘outperform’, five ‘hold’ and the remaining one ‘underperform’. There were no ‘sell’ ratings given.

GSK share price hit by legal woes

The GSK share price has underperformed the likes of AstraZeneca so far this year. As of 22 August, the stock is down 8.2% since the start of 2022 and 17.1% in the past month alone. The share price has recently been hit by concerns that its heartburn medication Zantac may have a link to cancer.

It has been revealed that there are approximately 2,150 US personal injury lawsuits involving the drug. On 11 August, the GSK share price fell from 1548.8p when the market opened to a 52-week low of 1,371p, slashing its value by 11.5%. The shares have not since recovered these losses, and they were trading at 1,427p at the close on 22 August.

GSK span off its consumer health division, Haleon [HLN.L], last month. This has allowed the company to focus its resources on prescription drugs and vaccines, while also giving it a stronger balance sheet.

Analysts have a reserved view of GSK shares, however. Out of 27 analysts polled by the Financial Times, two gave a ‘buy’ rating and six expected it to ‘outperform’. However, the vast majority rated the shares a ‘hold’, with 18 analysts doing so, while the remaining one analyst gave an ‘underperform’ rating.

PureTech Health boosted by Karuna Therapeutics

The PureTech Health share price has also underperformed AstraZeneca so far this year, with its share price down 14.5% year to date (to 22 August). The shares, however, have performed well in the past month, having risen 31.6% and recovering some strong losses made in the spring of 2022 and have not faced the same challenges as GSK.

Shares in PureTech jumped after it announced that founded entity Karuna Therapeutics [KRTX] had reported positive phase III trial results for a drug aiming to treat schizophrenia. PureTech has a 3.5% equity stake in Karuna Therapeutics, and it has generated around $681m from previous sales of shares. Puretech believes the remaining 3.5% stake has a market value of approximately $254m.

While there is less analyst coverage on PureTech Health shares, those who have offered analysis have been very upbeat over the shares. Out of four analysts polled for the Financial Times, three gave the shares a ‘buy’ rating and the remaining one analyst gave an ‘outperform’ rating.