We were just going over 10 stocks with high Return on Capital (ROC) that have been down in the dumps recently and several turned into trade ideas for the Member Portfolios.
Among them was AZN, which is in the Healthcare Sector that we like in this environment and their UK base gives them Global diversity that means they will not be at the whim of Trump's tariffs (we hope!). Â
The following is Anya's analysis followed by my trade idea for the LTP:
4. AstraZeneca PLC (AZN)
- Situation:Â A global biopharmaceutical giant, AZN has a strong ROC (87) and is currently 20.7% below its 52-week high.37
- Performance & Drivers: AstraZeneca reported very strong full-year 2024 results in February 2025, with total revenue up 21% (CER) and Core EPS up 19%.38 Growth was driven by key oncology drugs (Tagrisso, Enhertu) and strength across CVRM and R&I segments.38 The stock’s pullback might be related to broader market/healthcare sector weakness or specific pipeline/competitive concerns not detailed in the provided notes (e.g., competition for specific drugs).
- Valuation: The forward P/E ratio is around 15x 39, which appears reasonable for a large-cap pharma company with its growth profile. The PEG ratio is near 1.0 39, often suggesting fair value relative to expected growth.
- Outlook & Upside (Rest of 2025): The company guided for high single-digit revenue growth and low double-digit Core EPS growth for FY25.38 Achieving this guidance and positive pipeline developments are key. Upside Potential: Moderate but solid. A 10-15% appreciation by year-end seems achievable if the company executes on its guidance and market sentiment towards pharma improves.
- Verdict:Â Looks like solid value. The pullback seems more related to market factors than company fundamentals, given the strong recent results and outlook.
😎 Health Care is one of the only sectors we’re confident in.
