AstraZeneca’s (LSE: AZN) share price rose this week after after the EU approved Enhertu for adults with unresectable or metastatic HER2-positive solid tumours.
In layman’s terms, that means the drug can now be sold in the EU to treat certain adults. Specifically, those whose cancer has spread or cannot be removed with surgery, as long as the cancer has a specific marker called HER2.
That’s big news for UK investors interested in the healthcare sector. Regulatory approvals are difficult to secure and can open up new sales channels quickly – especially in oncology, where treatment demand is high and prices are often premium.
So for investors who’ve been considering investing in a stock like AstraZeneca, what does this mean – and more importantly, what do the experts think?
What major brokers are saying
While not all analysts have had a chance to react to the news so far, the overall tone is understandably positive.
Goldman Sachs initiated coverage on 1 July with a Buy rating and a 16,370p target, while Jefferies had already started at Buy on 26 June with an 18,000p target. That suggests both brokers see further growth potential, likely because of AstraZeneca’s oncology pipeline and the chance that new approvals can support sales growth.
However, earlier in June, Deutsche Bank took the opposite view, setting a Sell rating and an 11,500p target. It’s a surprising take, and one that means it thinks the market’s already pricing in too much optimism – or that the risk/reward balance looks less attractive than other brokers surmise.
For investors, that gap between the highest and lowest targets is a useful indicator: the stock may be popular, but it isn’t universally loved.
So how does it hold up against competitors?
Industry backdrop
The wider healthcare sector has done well over the past month, with most UK and US stocks achieving moderate gains. Overall, AstraZeneca remains one of the stronger big pharma names.
When compared with key US rivals, it showed 5.33% revenue growth and a 22% return on equity (ROE). Meanwhile, the industry average revenue growth in that table was 9.6%. Still, Merck looks stronger on profitability and scale, helped by its broad oncology franchise.
Pfizer looks weakest, with -2.43% revenue and negative EPS data in the comparison. Johnson & Johnson looks healthier and more stable, with a more defensive profile than Pfizer and stronger profitability.
With a price-to-earnings (P/E) ratio of 28, it’s not ‘cheap’ – but more affordable than J&J and Merck. So while AstraZeneca isn’t the top performer on every metric, it’s still holding up better than some slower growers.
Final thoughts
Overall, AstraZeneca looks more like a stable-at-a-reasonable-price stock to consider, rather than a pure growth story. That can work well in a long-term retirement portfolio, especially if you want quality and resilience rather than excitement.
But one thing it’s not is a standout income share, because the yield’s relatively low. So for the income-hungry dividend hunters out there, you may prefer to look for better options elsewhere on the FTSE.
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Mark Hartley owns shares in AstraZeneca.
