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AstraZeneca: Late-Stage Pipeline Looks Increasingly Well Positioned to Support Long-Term Growth

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Following a pipeline review of AstraZeneca’s AZN late-stage pipeline, we are increasing the long-term projections for several drugs, including camizestrant (breast cancer), capivasertib (breast cancer), eplontersen (rare disease), and danicopan (rare disease). Based on an evaluation of the drugs’ efficacy and side effect profiles relative to the competitive landscape, these drugs look increasingly well positioned to develop into significant new blockbusters for the company. As a result of the increased outlook for the pipeline drugs, we are increasing the firm’s U.S. listed share class to $78 from $74, but slightly reducing the local share class fair value to GBX 12,400 from GBX 12,500 as the changes in exchange rates more than offset the increased pipeline projections. As a reminder, we project AstraZeneca’s cashflows in U.S. dollars (the same currency used in Astra’s financial results) for our discounted cash flow model. We then convert the valuation into pounds for the local share class.

Overall, AstraZeneca continues to be well positioned for growth, and we project 8% annual sales growth over the next five years (excluding COVID-19-related sales) as new products should offset patent losses. Additionally, a strong outlook for the firm’s pipeline, including the recent increased projections, continues to provide confidence in the company’s wide moat.

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The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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Damien Conover

Sector Director
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Damien Conover, CFA, is the director of healthcare equity research for Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc. He is also director of equity strategy, responsible for helping to shape, package, and surface research based on Morningstar’s investment philosophy by working closely with the firm’s sector strategists and directors.

Before joining Morningstar in 2007, Conover was an equity research analyst covering the healthcare sector for Raymond James, Bank of Montreal, and Tucker Anthony.

Conover holds bachelor’s and master’s degrees in finance from the University of Wisconsin and was a member of its Applied Security Analysis Program. He also holds the Chartered Financial Analyst® designation.

Damien Conover, CFA, is the director of healthcare equity research for Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc. He is also director of equity strategy, responsible for helping to shape, package, and surface research based on Morningstar’s investment philosophy by working closely with the firm’s sector strategists and directors.

Before joining Morningstar in 2007, Conover was an equity research analyst covering the healthcare sector for Raymond James, Bank of Montreal, and Tucker Anthony.

Conover holds bachelor’s and master’s degrees in finance from the University of Wisconsin and was a member of its Applied Security Analysis Program. He also holds the Chartered Financial Analyst® designation.

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