Although AstraZeneca (LSE:AZN) shares didn’t decline in 2020, they haven’t rallied like many other FTSE 100 stocks have in the past three months either. One reason could be that some of the potentially positive events for AZN in 2020 didn’t turn out to be as great as expected.
Many investors, for example, regarded AstraZeneca’s Covid-19 vaccine as one of the leaders for much of its development phase. When it came to end results, however, AstraZeneca’s Covid-19 vaccine efficacy rate wasn’t as great as Pfizer or Moderna’s.
Fortunately, it’s a new year. With the new year comes new potential events. With that in mind, here are some potential events that I think could send AstraZeneca shares higher.
Important events for AstraZeneca shares in 2021
I reckon 2021 could be an eventful year for AstraZeneca as the company could release numerous phase 3 trial results that could give more information into the value of AZN’s pipeline. If more key assets of AstraZeneca’s pipeline are approved than expected, AZN has the potential to go higher.
This year could also be important as AZN’s Alexion purchase is expected to close in Q3.
Management expects the Alexion purchase to help with profitability and core operating margin in the short term. Management also expects recurring run-rate pre-tax synergies of $500 million by the end of the third year after the deal closes. With this timeline, AstraZeneca management has a chance to show how they are executing on the deal via outlook and potentially Q3/Q4 results. If the merger goes better than expected, I think there is also a chance for AstraZeneca shares to go higher.
Other important AZN events include how much money the company makes from its Covid-19 vaccine if management were to decide on that path. In terms of its Covid-19 vaccine, AZN has committed to not profiting before the ‘pandemic period’, but not after it. According to earlier releases, management has defined the ending of the pandemic period as the start of July of 2021. Another key event could be whether the company’s long acting monoclonal antibody combination for Covid-19 is approved. In terms of the antibody combination, there could be demand from those whose immune system doesn’t respond to traditional vaccines if the combination works well and is approved.
Last but not least, I think the earnings reports of AZN will be important. If the company beats the market estimates, there is potential for a rally in shares.
Would I buy shares?
Long term, I reckon AZN is in a great position. As the speed of developing a Covid-19 vaccine shows, technology is rapidly advancing. While it took several years at the earliest to develop vaccines before, it has now taken just around a year to come up with a vaccine for the pandemic. Pharmaceutical companies like Moderna are more efficient because they have faster computers and more RNA technology experience. Scientists could also potentially use the recent AI-unlocked protein-folding breakthrough to help fight future outbreaks.
Because I think management will harness many of the future technology advancements successfully, I’d buy and hold AstraZeneca shares.
