MENU

Reasons To Buy, Hold Or Sell AstraZeneca plc

AstraZeneca (LSE: AZN) (NYSE: AZN.US) is one of the largest companies in the FTSE 100 and many private investors have differing opinions about the pharmaceutical group and its prospects.

So here’s a quick rundown of some reasons why you may wish to buy, sell or simply hold on to the company’s shares.

Buy

AstraZeneca has been in the doldrums for some time now, and its share price has significantly underperformed the FTSE 100 over the past year. So why would anyone want to buy it?

Well, over the same past 12 months, new leader Pascal Soriot has made some encouraging changes, including a major shake-up of the group’s senior management, and a new global strategy that’s clearly focused on R&D.

And he has embarked on some strategic acquisitions of companies with treatments that are well advanced in clinical trials, to provide a further boost to the product pipeline.

Bringing new pharmaceutical treatments to market is a marathon not a sprint, so it’ll take time for everything to pay off.  But if and when it does, AstraZeneca should start to provide patient investors with some decent capital growth.

Hold

Even if AstraZeneca’s share price isn’t likely to surge in the near future, many people will be content to hold the shares just for their 6% yield — far more than you could get if you put your money into a savings account.

Of course, the company will need to maintain its dividend for it to remain attractive, but so long as earnings don’t drop significantly the blue chip should be able to sustain the payout, even if the company is not able to actually increase it. 

Sell

If you do own shares in AstraZeneca you might well be asking yourself why you’d want to continue to hold a company that faces such an uphill and long-term struggle ahead of it? And it’s a struggle that AstraZeneca is far from certain of winning.

And why would you want to own a company whose revenue in 2018 might be 25% lower than it was last year, assuming recent consensus analyst forecasts prove to be accurate.

Even if, as AstraZeneca has said, it believes it can “significantly exceed” the consensus, its revenue is still likely to remain relatively disappointing for a long time to come, which could threaten both its capital growth and ability to maintain its dividend. Surely there are better companies in which invest?

Top tips

If you’re looking for some high-quality investment opportunities, you should definitely the Motley Fool’s special report , “5 Shares To Retire On“.

This exclusive report features five top-quality shares — companies that have an outstanding record of providing reliable shareholder returns — selected by our team of top share-pickers here at the Motley Fool.

Get your FREE copy now.

> Jon does not own any share mentioned in this article.