Yesterday, AstraZeneca (LSE:AZN) announced results for the third quarter. The results were a mixed bag, with AstraZeneca shares actually falling on Friday morning. Even with this, I think there are several reasons to be bullish about the stock and the company. Let me explain in more detail.
The first reason I’m keen is due to the positive ESG impact. I’ve written a lot recently about how such investing is here to stay and is growing in demand. Therefore, picking stocks that have an appeal for ESG investors should see prolonged demand in the future.
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AstraZeneca fit the bill (in my opinion) on this front. For one point, the company is not making a profit from the production and distribution of the Covid-19 vaccine so far and only plans to make a modest profit post-pandemic. In the latest results, sales from the previous quarter for the vaccine stood at a chunky $1.05bn. From a social point of view, this is a good move. Making profit from the vaccine during the pandemic would have been lucrative, but not the right thing to do.
The company also publishes a sustainability report each year, with a push towards making healthcare more accessible to people around the world.
A strong track record
Another reason to buy AstraZeneca shares is the track record of performance. The share price over the past decade has been a pretty straight line moving higher. Over all of the timeframes I consider (three, six, 12 and 24 months), the share price would have given me a profitable return. Granted, it’s not always particularly high. For example, over a one-year period I’d have gained 7.5%. But the point here is that the stock has relatively low volatility and is in a strong long-term trend moving higher.
For a potential investor, this set-up is appealing. I want to have stocks like this in my portfolio that should hopefully provide me with steady returns. I can then look to take more risks on other stocks. When I bring everything together, my overall stock portfolio risk should still be balanced, thanks to the mix that I include.
Positive about AstraZeneca shares, but not without risks
Finally, I think the latest results were positive. Revenue for the quarter came in at $9.9bn, an increase of 48% versus the same period last year. This was driven in part thanks to the acquisition and integration of Alexion.
Even with this, good percentage growth was seen across multiple segments from a year-to-date perspective. Product sales were up 29%, oncology division revenue was up 16% and CVRM revenue was up 10%. These drivers should allow the company to meet the full-year guidance provided earlier this year.
In terms of risks, the business noted that Covid-19 is still going to cause issues. When commenting on the virus impact, it said that “variations in performance between quarters can be expected to continue”.
I also think it needs to keep an eye on expenses. Total operating expenses increased year-to-date by 34% to over $17bn.
Overall, I think the company is doing well and so am considering buying AstraZeneca shares right now.