3 Things That Say AstraZeneca plc Is A Buy

astrazenecaAstraZeneca (LSE: AZN) (NYSE: AZN.US) is an interesting proposition. The FTSE 100’s second-biggest pharmaceuticals firm was looking a bit lost a few years ago, and its strategy for coping with the expiry of some key patents and increasing competition from generic drugs was far from clear.

But since then we’ve seen something of a transformation, and the firm’s direction has become a lot clearer. So clear, in fact, that it inspired Pfizer to attempt a takeover earlier this year — it failed, but another try is not out of the question.

With the shares still buoyed be the bid at £44 and on a forward P/E of a slightly lofty 17-18 for the next two years, they’re not obviously a screaming bargain. But I reckon AstraZeneca has a few things very much in its favour:

1. The boss

Chief executive Pascal Soriot set his sights firmly on a return to profit growth when he took the helm, and he’s not been slow in instilling his vision on the company. AstraZeneca is getting back to its roots, re-establishing its “scientific leadership” and focusing on its expertise in new drug development.

And it seems to be paying off, with Mr Soriot telling us at 2013 year-end time “I am confident that we can return to growth faster than anticipated and expect our 2017 revenues will be broadly in line with 2013“.

He went on to say that “We continue to focus our organisation on the areas that will drive growth, redeploying our resources to fund the promising late-stage pipeline, which nearly doubled in size over the last 12 months“, which takes me to…

2. The pipeline

AstraZeneca’s drug pipeline is where money meets mouth, and it’s been surging. At the end of last year, there were 11 new molecular entities in Phase III or registration, including things with such impressive names as benralizumab, selumetinib, olaparib and moxetumomab. That’s almost twice the number a year ago. The firm also told us it had 19 new Phase III candidates for starts in 2014 and 2015.

And at first-quarter time this year, there were some key development and regulatory milestones to report, including cancer drug AZD9291 receiving a Breakthrough Therapy designation by the FDA in America.

3. The bid

The elephantine presence of the Pfizer bid cannot be ignored, and I think it’s been a bit of a mixed blessing. It still plays a part in today’s share price, which did not fall back to pre-bid levels after the hostile attempt failed, and so there’s some bullishness there that could evaporate. Some will be holding out for a new bid, but I really hope we don’t get one — I see AstraZeneca’s independent long-term future being a lot brighter than as a predatory takeover target for a notorious asset-stripper.

But on the other hand, it did help raise awareness of the potential of AstraZeneca, after a few years of the shares being badly undervalued.

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Alan Oscroft has no position in any shares mentioned. The Motley Fool has no position in any of the shares mentioned.