Have you heard about AstraZeneca's vaccine breakthroughs and are considering investing in its stock? Well, before you do, you should first read this guide as it will help you learn about its business, revenue streams, and how viable it is as a long-term investment. After reading, you'll be equipped with the essential information that will help you decide if you should invest in this company or not.
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Learn How to Buy AstraZeneca Stocks in 3 Easy Steps
Find a broker
A broker arms you with the right tools to trade AstraZeneca or any other stock on their platform.
Analyze AstraZeneca chart
Brokers have a charting application that you can use to gauge AstraZeneca's price movement and determine a price level to enter a trade.
When you find your entry, the last step is to place your first trade and manage your position.
AstraZeneca Company Overview
People nowadays think of AstraZeneca as one of the coronavirus vaccine frontrunners, but the company operates in a much broader scope. For years, AstraZeneca has been a profitable distributor of cancer and immunology drugs.
It also develops and manufactures prescription medicines for major cardiovascular, renal, metabolism, respiratory, neuroscience, and gastroenterology diseases. In terms of revenue, AstraZeneca is among the top-selling pharmaceutical companies in the world, with $25.8 billion in sales and $26.6 billion in total revenue for 2020. And at its present share price of $48.67, it boasts a market value of $129 billion.
AstraZeneca is headquartered in Cambridge, England and its current Chief Executive Officer is Pascal Soriot.
AstraZeneca Business Model and Revenue Streams
AstraZeneca generates revenue primarily from product sales of its existing medicines and new medicine launches. In 2020, its product sales grew by 10% to $25.89 billion.
This is subdivided into the company's three main therapy areas. For instance, its Oncology Product Sales made up about 42% of the total revenue with $10.85 billion. Its CVRM (Cardiovascular, Renal & Metabolism CVRM) product sales produced $7 billion or 27%, and R&I (Respiratory & Immunology) provided them with $5.35 billion or 21% of the total.
Its top product that generated the most revenue is Tagrisso, which is a medicine for treating non-small-cell lung carcinomas with specific mutations. Tagrisso sales totaled $4.3 billion for the company. Symbicort, a medicine for asthma and COPD, comes in at second with $2.7 billion in 2020.
AstraZeneca did not include COVID-19 vaccine sales in its annual report.
History of AstraZeneca
AstraZeneca has its roots in Södertälje, Sweden. It was founded in 1913 by 400 doctors and apothecaries and was originally Astra AB. In 1999, it merged with the British Zeneca Group and became AstraZeneca plc, with the main headquarters chosen to be in London and R&D headquarters in Sweden.
In 2000, the company launched Nexium (esomeprazole), a treatment for acid-related diseases. This drug generated about $14.4 billion for the company between 2001 and 2005.
Two years later, in 2002, AstraZeneca's Iressa (gefitinib) was approved for the treatment of non-small cell lung cancer in Japan. The company then made a huge acquisition in 2006 when it purchased biotechnology company Cambridge Antibody Technology (CAT) for £702 million.
AstraZeneca later combined CAT with another firm it acquired, MedImmune LLC. MedImmune was purchased in 2007 for $15.2 billion.
From 2007 to 2012, the company made several other acquisitions, including another billion-dollar purchase of another biotechnology company, Ardea Biosciences. The deal was worth $1.2 billion at that time.
In 2013, the company went on restructuring mode when it opened a new facility in Cambridge and cut 1,600 jobs. Then, the following year, it received a "final offer" from Pfizer for £55 per share, putting a price tag of $117 billion on AstraZeneca. But it rejected this offer in a few months.
By 2015, the company became the 8th largest pharmaceutical company in the world by revenue. And last year, during the pandemic, AstraZeneca entered the COVID-19 vaccine efforts and reached phase 3 trials within the year and ultimately got approval from the UK on December 30.
Currently, its coronavirus vaccine is evaluated to be effective against Brazil and South African variants and possibly have higher efficacy in the elderly.
Brokers That Offer AstraZeneca Shares
We've reviewed several brokers that offer AstraZeneca shares, and we find that the ones we listed below provide the best tools and trading support that will help you achieve a great trading experience.
Should I Invest in AstraZeneca Stock?
The main reason for investing in AstraZeneca is that you are already purchasing a profitable company whose growth prospects are not conditioned on the success of its COVID-19 vaccine, which has been the cause of its name exploding recently.
AstraZeneca remains a profitable business with a net margin that swelled to 11.58% in 2020 from 5.47% the previous year; its EPS increased to $1.22 as a result. Analysts expect that its EPS can rise to $2 this year. The company also dishes out regular dividends and has paid $1.86 per share annual; its current dividend yield is 3.78%.
AstraZeneca Stock Investment Potential
AstraZeneca's stock has been on the rise since the tail end of 2016, and even on a higher timeframe, you can see a much broader uptrend in play. And from 2016, its growth rate annually stands at 10.24%, which can give you a rough estimate of how much it can appreciate in the next few years. The company also sits in plenty of cash and cash equivalents and is the most it had in recent years at nearly $8 billion.
At its current price, analysts believe that it is at least 20% off its fair value. The highest price target for the company is somewhere around $175.
What Kinds of Investors Should Include AstraZeneca in Their Portfolios?
Investors who are banking on more upside growth for an already profitable firm can find a good investment in AstraZeneca. The company's most recent developments offer reasons to be optimistic. For example, its breast cancer treatment, Enhertu, was approved in the U.S. and Europe in January. European regulators also approved a new dosing regimen for its lung cancer treatment, Imfinzi.
And its highly profitable existing products, including the Tagrisso drug and Lynparza that grew 31% and 42% respectively in Q4, provide the company a highly dependable diverse revenue stream.
How Much Should I Invest in AstraZeneca
Now that you already know about AstraZeneca's business and its investment growth potential, it'll be much easier for you to estimate how much you should invest in the stock.
Here you can consider a few factors to help you decide. Of course, the price will be something to think about, and so is the frequency of your investment. You should also recall your investment objectives and factor in your age, risk profile, and investment horizon in your evaluation.
Having all of these taken into account will enable you to form a picture of the appropriate exposure or investment amount you should have in the company.
For instance, someone who's only in their 30s would have a more aggressive portfolio and invest a larger percentage of their income in such equities. On the other hand, someone in their 70s would be a bit more conservative.
How to Buy Shares in AstraZeneca Stock?
As mentioned, you need to open a brokerage account to get started trading AstraZeneca shares. Brokers will need a few requirements from you to approve your account, including an online application form and some supporting documents. It usually takes a few business days for your broker to accept your application.
Once your account is approved, you can now proceed with funding. Brokers have several deposit methods, and some of the common ones are electronic bank deposits, wire transfers, check, and account transfers from another firm.
The transfer time will depend upon the method you used. If you want the one that provides transfers within minutes, you can go for electronic bank transfers.
Finally, when you see your deposit amount reflect in your trading account's balance, you're all set to place your first AstraZeneca trade.
Buy AstraZeneca Shares Using a Broker
The account opening form you need to fill up will ask for your personal information, such as your name, address, and date of birth. And the supporting documents will include identity proof (e.g., Tax Identification Number (TIN), Social Security Number (SSN), passport, driver's license).
You may also need to disclose your employment details and even supply proof of income. Your broker requests so much information because it only complies with anti-money laundering regulations, anti-terrorist financing requirements, tax laws, and record-keeping procedures. And this is the same for every other regulated broker.
Buy AstraZeneca Shares With a Direct Stock Purchase Plan (DSPP)
One other way to invest in AstraZeneca shares is to subscribe to a Direct Stock Purchase Plan or DSPP. This method enables you to buy shares without a broker, and this is because you are purchasing shares directly from the company.
DSPPs will usually have setup fees, an initial investment amount, and sometimes a maximum amount that you can invest under the program. Also, it's important to note that for each company you want to invest in, you have to open a separate DSPP. However, not all companies have this program.
AstraZeneca does offer a direct investment program, and you have to get in touch with the company's transfer agent to get started.
Frequently Asked Questions
AstraZeneca is particularly effective against Brazil and South African variants and potentially offers higher efficacy for the elderly. These are, of course, positive for the company's stock this year, especially as the entire world is undergoing a vaccination drive and AstraZeneca is one of the vaccine frontrunners.
AstraZeneca is a profitable company that has consistently reported net profits for several years. Its most recent net income for FY 2020 is $3.22 billion.
Yes, AstraZeneca's ample daily volatility and trading volume are both favorable for trading.
The best platform for trading AstraZeneca should have a comprehensive set of analysis tools. It should also be able to pull out the company’s data quickly.
AstraZeneca follows the market hours of the exchanges where it is listed from. For instance, its stock on LSE is traded between 3 am to 11 am ET.
AstraZeneca is listed on the London Stock Exchange (LSE) and NASDAQ. AstraZeneca Pharma India, a subsidiary of AstraZeneca Plc, UK, on the other hand, is listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange of India (NSE).