On Friday, HSBC updated its stance on AstraZeneca (NASDAQ:AZN) shares, a prominent biopharmaceutical company, by increasing its price target to GBP 129.50, up from the previous GBP 121.50. The firm continues to endorse a Buy rating on the stock, traded on both the London Stock Exchange (AZN:LN) and NASDAQ (NASDAQ: AZN).
The adjustment in the price target reflects HSBC's sum-of-the-parts (SOTP) and scenario analysis, which suggests that AstraZeneca's current share price already discounts consensus and optimistic scenarios with a weighted average cost of capital (WACC) between 8.5% to 11%.
HSBC notes that although it has slightly lowered its near-term earnings per share (EPS) estimates for 2024 and 2025 by approximately 6-7% due to anticipated increases in research and development (R&D) spending and tax rates, the introduction of new phase III products into its valuation model more than compensates for these impacts.
HSBC has hence revised its target price upward to 12,950p from the earlier 12,150p, while reiterating its Buy rating on the company's shares. The firm anticipates that the upcoming capital markets day on May 21, 2024, will be a significant event that could strengthen market confidence in the efficacy of AstraZeneca's pipeline and its potential to drive medium-term growth. The analyst's commentary underscores the importance of this event in shaping investor sentiment towards the company's future prospects.
InvestingPro Insights
Amid the latest updates from financial institutions on AstraZeneca, InvestingPro users have access to a wealth of real-time data and analytics that may provide additional context for investors. Notably, AstraZeneca's market capitalization stands at a robust $207.5 billion, reflecting its prominent position in the pharmaceutical industry. The company exhibits a P/E ratio of 34.87, which adjusts to a more attractive 26.53 when considering near-term earnings growth. This aligns with one of the InvestingPro Tips that notes AstraZeneca is trading at a low P/E ratio relative to near-term earnings growth, potentially indicating an undervalued status in the market.
The company has also demonstrated a solid gross profit margin of 82.45% over the last twelve months as of Q4 2023, underscoring its efficiency in generating revenue over its cost of goods sold. Another notable metric is the dividend yield, which currently stands at 2.87%, complemented by a significant dividend growth of 112.09% over the same period. This is consistent with the InvestingPro Tip that highlights AstraZeneca's track record of maintaining dividend payments for 32 consecutive years, a testament to its financial stability and commitment to returning value to shareholders.
For those looking to delve deeper into AstraZeneca's financials and future outlook, InvestingPro offers additional insights, including 11 more InvestingPro Tips specific to the company. To explore these in detail and make more informed investment decisions, consider subscribing to InvestingPro with an extra 10% off a yearly or biyearly Pro and Pro+ subscription using the coupon code PRONEWS24.
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