Analysts now believe that the AstraZeneca (LSE:AZN) share price is approaching fair value. In fact, the current consensus for fair value is just 2% above the current share price.
That’s probably not the most enticing forecast. What’s more, this is the consensus of 23 institutional analysts. As you may know, I regularly highlight that institutional analysts can get it wrong, but the consensus of as many as 23 is normally a good bellwether.
What’s more, they haven’t been continually upgrading their forecasts over the past year. Expectations for 2026 are pretty much in line with where they were 12 months ago. That doesn’t give me much confidence that there will be upgrades incoming.
So, is there any value left in this stock? Let’s explore.
Valuation is key
Of course, the valuation is the most important place to start if we’re doing our own research. The stock trades at 20.4 times forward earnings, a little (4.6%) above the sector average.
However, medium-term growth is actually projected to be better than most of its peers. Its price-to-earnings-to-growth (PEG) ratio — which is the price-to-earnings ratio adjusted for medium-term growth expectations — sits around 1.6. Yes, that sounds overvalued compared to historic norms, but it’s actually 14.3% less than the sector average.
That latter figure does indicate that there could be some room for growth.
What’s more the company’s balance sheet is pretty strong for the sector. Its market cap is now $290bn, but the net debt position is just $24bn. For a company generating around $60bn a year in sales, that seems very manageable.
Relative stability and quality
AstraZeneca remains well regarded primarily because the market continues to assign a premium to the quality and depth of its oncology franchise.
Unlike peers that rely on one or two dominant blockbusters, AstraZeneca’s growth is driven by a broad portfolio of differentiated medicines, underpinned by an unusually productive R&D engine. That diversity reduces risk and supports more durable earnings growth.
Under Pascal Soriot, the company has been particularly effective at combining internal science with targeted partnerships. Selective deals in areas such as antibody-drug conjugates and radiopharmaceuticals have strengthened its competitive position. That’s come without the execution risks associated with mega-acquisitions.
As a result, AstraZeneca is now a leader across several high-growth oncology niches, benefitting from structural trends as global cancer drug spending continues to rise.
Imfinzi remains central to near-term profitability, with growth driven by steady label expansion across lung, bladder, and gastrointestinal cancers. At the same time, newer assets such as Enhertu and Datroway give the pipeline depth and earnings prospects.
That said, a key risk is execution as is typically the case in this sector. Pharma companies can spend billions on new drugs only to get setbacks in clinical data or negative regulatory decisions.
The bottom line
While the valuation doesn’t suggest too much room for appreciation, I believe the stock is still worth considering as a long-term compounder. Operational excellence and quality is key to the thesis.
