AstraZeneca is one of the top IBD 50 Stocks to Watch, thanks to strong growth projections and outperformance in its sector.
The company is a multinational pharmaceutical based out of Cambridge, England. It was founded in 1999 from a merger of Swedish Astra B and British Zeneca Group.
AstraZeneca has become a household name thanks to its Covid-19 vaccine, though the company produces many other drugs to justify its $200 billion market cap. Some of these include treatments for cancer, cardiovascular and respiratory problems and drugs to combat inflammation and infections.
With a strong product lineup, AstraZeneca has become one of the market's top stocks in terms of growth. After posting EPS of $2.49 in 2021, analysts expect EPS to increase drastically to $3.35 in 2022, and make a further increase to $3.93 in 2023.
Stocks To Watch: Strong Results, Company Backs Guidance
Strong projections have to be backed up by results, and in AstraZeneca's first-quarter earnings — reported last Friday — they certainly were. EPS came in at $1.89 with revenue of $11.39 billion, beating analyst estimates.
It grew in many segments. The most notable was in oncology treatments, which had a 25% increase in revenue. The diabetes drug Farixga also performed well, contributing $1 billion in revenue on its own.
The company also reiterated its guidance of strong EPS growth, above 25%, and revenue growth in the high teens. These growth projections are all the more impressive considering the company is expecting Chinese revenue — which accounted for 16% of total revenue a year prior — to decline over the year. Beijing is looking to lower the price of off-patent drugs.
While much has been made of the reluctant uptake of AstraZenca's covid vaccine, the vaccine was previously being sold at cost and does not represent a core driver of its business.
AstraZeneca A Stock To Watch As It Outperforms Peers
Strong growth and performance have led AstraZeneca to boast a top IBD Composite Rating of 99. The stock is leading an outperforming diversified medical industry group, which ranks 35th out of IBD's 197 industries.
After breaking out of a cup with handle on March 17, shares traded sharply higher but have now retreated and are finding support at the 10-week moving average. That creates a follow-on buy area from the 10-week average at 64.60 to 10% higher, or 71.06.
With a relative strength line also at all-time highs, the stock has bullish characteristics. But the stock market is still in a correction, so it's best to add AstraZeneca to a watchlist rather than buy shares right now.
