In a show of strength amid widespread weakness in the stock market, the AstraZeneca (LSE: AZN) share price is up 16% this year. It’s outperforming the FTSE 100 index by nearly 20%.
The Anglo-Swedish company is the second-largest FTSE 100 stock by market capitalisation following an excellent five years during which AstraZeneca shares have nearly doubled in value.
The Footsie-listed pharmaceutical titan boasts an impressive portfolio of products for major diseases — and demand has never looked stronger. I view AstraZeneca as one of the top biotech stocks to invest in, not just in the UK, but in global terms. Here’s why.
A Covid-19 vaccine champion
AstraZeneca attracted significant publicity from its development of an effective vaccine against Covid-19 in collaboration with Oxford University. Admittedly, the reception was mixed.
Although widely used in the UK, AstraZeneca failed to secure regulatory approval in the US amid fears over rare blood clot side effects. Many wealthier countries showed a preference for more expensive mRNA alternatives developed by competitors Pfizer and Moderna.
Nonetheless, Astrazeneca has distributed over 2bn doses of the vaccine called Vaxzevria to 170 countries, including many in the developing world. After initially selling its vaccines at cost price, it recently started to take profits.
In Q1, the business reported impressive revenue of $1.1bn from Vaxzevria sales. This contributed to a 60% increase in total revenue, which hit $11.4bn, beating the consensus forecast among City analysts.
Looking ahead, AstraZeneca expects its vaccine sales to decline. However, anticipated growth in sales for the company’s Covid-19 antibody treatment Evusheld is expected to partially offset this. This should provide short-term support for the AstraZeneca share price, in my view.
More reasons to buy AstraZeneca shares
The reasons why AstraZeneca is one of my favourite FTSE 100 stocks to buy go far beyond its Covid-19 vaccines.
The firm is a market leader in oncology treatments. They form 32% of the company’s total revenue. In its latest quarter, the business delivered a 25% uptick in revenue for this division and its product pipeline looks promising.
For instance, in a recent breakthrough trial, patients using the company’s breast cancer drug Enhertu saw a 49% reduction in the risk of disease progressing and a 36% reduction in the risk of death compared to standard chemotherapy. The drug has already secured US Food and Drug Administration approval.
I also like AstraZeneca’s geographic diversification. Total revenue in Q1 was split nicely across continents with 36% coming from the US, 30% from emerging markets, 20% from Europe, and 14% from the rest of the world. This strengthens the company’s ability to withstand localised economic shocks.
What’s more, the stock offers a handy dividend yield of 2.13%. I see this as a handy bonus for a company with strong capital growth prospects.
Why I’m investing more in this FTSE 100 stock
I own a small stake in AstraZeneca shares, but the more I research this biotech pioneer, the more I like it. Demographic changes point to aging populations in many countries. I’m optimistic about long-term demand for its healthcare solutions.
Accordingly, I consider it to be an excellent growth stock — one of the best in the FTSE 100, if not the best. I’m buying more shares in June.
