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At 8,000p, is FTSE 100 company AstraZeneca a share worth me buying right now?

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Scientist filling a needle
Image source: Getty Images.

Of course, the big news this week from London-listed pharmaceutical giant AstraZeneca (LSE: AZN) is that its AZD1222 vaccine met primary efficacy endpoint in preventing Covid-19.

Hoorah! Now we have three potential mass-market Covid-19 vaccines produced in the Western world – the Pfizer/BioNTech one, the Moderna one, and now the AstraZeneca one developed in collaboration with Oxford University.

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Professor Andrew Pollard, chief investigator of the Oxford Vaccine Trial at Oxford, said: “We’ve found that one of our dosing regimens may be around 90% effective.” And that great news puts the vaccine right up there with its competitors’ outcomes.

Why I think AstraZeneca is a share worth buying

However, AstraZeneca’s share price didn’t react much to the news. And chief executive Pascal Soriot shed some light on why that might be. He said in its press release: “The vaccine’s simple supply chain and our no-profit pledge and commitment to broad, equitable and timely access mean it will be affordable and globally available.”

So, that no-profit pledge probably means AstraZeneca will cover its costs developing, producing and distributing the vaccine, but won’t benefit financially from its success beyond that –at least for a while. Indeed, the no-profit pledge is time-limited. And profits will flow to the company from the vaccine after the pandemic ends. Some sources have it the firm could declare the end of the pandemic as early as July 2021.

Even so, AZD1222 Covid-19 vaccine isn’t the only trick in AstraZeneca’s box. The firm’s news feed is vibrant and has been for many months and over recent years. The dark days of patent-expiry headaches and a wilting share price are long gone. Now, the Research & Development (R&D) pipeline is spitting out marketable products at a fast pace. And I think that’s a great reason for buying some of the shares now to tuck away for the long haul.

Indeed, I wish I’d done just that 10 years ago. Then, I was thinking of buying some and when the stock was changing hands near 3,060p. I’m not even going to calculate the percentage capital gain because the thought of the missed opportunity is too painful! But what about now? Could we see a similar rise in the share price over the next decade? I believe it’s possible.

Growth in earnings ahead

City analysts following the firm have pencilled in an increase in earnings near 26% for next year. If the R&D pipeline can keep powering incremental yearly increases in earnings near that level, I reckon the share could rocket over the next 10 years.

Meanwhile, in the short term, we’re seeing a bit of weakness in the share price. And that could be driven by the big rotation from defensive shares like AstraZeneca into cyclical shares that look set to benefit from the retreat of Covid-19.

Indeed, investors can’t have their money everywhere all at once. So they could be selling AstraZeneca shares to buy stocks like Lloyds right now. I’d take a contrarian approach, buy defensives like AstraZeneca, and hold for the long haul.

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Kevin Godbold has no position in any share mentioned. The Motley Fool UK has recommended Lloyds Banking Group. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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