Have AstraZeneca shares hit a 52-week high that makes them worth considering?

AstraZeneca (LSE:AZN) is a British share in good shape. It recently hit a 52-week high of 13,290p, shortly after the pharmaceutical giant hit a milestone of becoming FTSE100The first company worth £200 billion.

It has risen about 81% in five years, destroying the Footsie’s return. It has almost tripled in a decade, leaving it a disappointing peer GSK in the dust.

I find that impressive, considering the company isn’t playing in the high-growth GLP-1 weight-loss sandbox (at least not yet). Plus, unlike its Covid vaccine competitors Modern AND Pfizermanaged to cope with and overcome the decline in vaccine sales following the pandemic.

But that continued growth has also made the stock more expensive. Do they still offer any value today? Let’s take a look.

Summary

AstraZeneca trades on a price-to-earnings (P/E) ratio of 21. Is that expensive? Well, compared to the FTSE 100 (around 12) and GSK (10.3), it certainly is.

But the company is truly global and looks cheap compared to forecast P/E multiples New Nordisk (39.7) and Eli Lilly (57.8). That said, this stock is probably a little frothy right now due to investor excitement around the GLP-1 boom. Merck is trading at a P/E ratio of 19.7.

Based on this measure, I would say the stock is fairly valued. It generally aligns with large healthcare companies in S&P500.

Dividend yield is often used by investors to compare the attractiveness of different stocks. On this front, AstraZeneca does not offer an attractive income prospect, with a fairly low dividend yield of 1.8%.

Pioneer of oncology

In H1, total revenue increased 18% year-over-year to $25.6 billion, with double-digit growth across all four businesses.

• Oncology: 22% increase
• Cardiovascular system, kidneys and metabolism: 22%
• Respiratory and immunology: 22%
• Rare disease: 15%

AstraZeneca’s ambition is to transform cancer treatment for patients by replacing chemotherapy and radiotherapy with more targeted treatments.

In this regard, the company recently acquired the oncology company Fusion Pharma, which specializes in radioconjugates (a more precise mechanism of destroying cancer cells compared to traditional radiotherapy).

In addition, the company is looking to enter the lucrative global obesity market. The company has licensed Eccogene’s ECC5004, a once-daily weight management pill that the company believes could eventually prove more popular than current once-weekly injections (including Coal).

Of course, there’s a chance that these groundbreaking new treatments won’t work. In the meantime, the company faces regulatory risk and a high probability of failure in some late-stage clinical trials.

My stupid conclusions

AstraZeneca’s revenues have grown rapidly in recent years: from $25 billion in 2020 to $46 billion in 2023.

The company aims to reach $80 billion in annual revenue by 2030. This will be driven by the expected launch of 20 new medicines, many of which have the potential to generate $5 billion+ in peak annual sales.

CEO Pascal Soriot called it “new era of growth”. This is not a slow pharmaceutical giant.

Assuming that the same level of profit margins is maintained, the company’s profits could then exceed $10 billion, while in 2023 they amounted to just under $6 billion.

That’s why I became a shareholder earlier this year. But if I didn’t already own the shares, I’d still consider buying them today to hold them for at least the next five years.