AstraZeneca's Current Valuation Not Reflective Of Its Strong Fundamentals, Analyst Says

BMO Capital Markets initiated coverage on AstraZeneca Plc AZN with an Outperform rating and a price target of $82.
The analyst writes that AstraZeneca's growth and margin expansion are undervalued relative to peers as the company continues to migrate to higher-margin programs.
AZN trades at a discount to peers through 2026E with top-and-bottom-line growth 2023-2026 of ~6% and ~14%, respectively, based on consensus, and ~7% and ~13% based on BMO estimates.
Also see: AstraZeneca Bets On UK Listed Firm For Lung Diseases.
The analyst writes that AZN's operating margins have historically lagged behind its peers due to its lower-margin chronic portfolio and risk-sharing partnerships that weigh on gross margins.
While risk sharing is still an essential part of AZN's strategy, the company's acquisition of Alexion and durable growth of Oncology should accelerate margin expansion.
Also, the company's pipeline has been the main driver. A steady pace of meaningful news flows should drive positive momentum beyond 2023, and life cycle opportunities can more than offset genericization risk in 2024-2030.
Price Action: AZN shares are up 0.47% at $69.83 on the last check Thursday.

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