Shares in pharmaceutical development company Vectura (LSE: VEC) have soared by around 10% today after it announced two pieces of very positive news flow. The first is that the FDA has approved the dual combination Utibron Neohaler and standalone monotherapy Seebri Neohaler products for treatment of chronic obstructive pulmonary disease (COPD). This has triggered a milestone payment of $22.5m from Novartis to Vectura as part of the deal agreed between the two companies regarding the treatment.
Additionally, Vectura has also announced a €750k milestone payment from Novartis’s subsidiary Sandoz, relating to a development milestone for VR632, which is a generic, combined therapy for asthma/COPD.
Clearly, today’s news is hugely positive for Vectura, but despite its share price rise it still seems to offer excellent value for money. Certainly, its forward price to earnings (P/E) ratio of 95 may put a number of investors off, but with its bottom line forecast to rise by 141% next year, it puts Vectura on a price to earnings growth (PEG) ratio of only 0.3. This indicates that its shares appear to be well-worth buying for the long term.
Of course, the health care space offers other excellent opportunities. AstraZeneca (LSE: AZN) has endured a number of challenges in recent years, but now appears to have the right strategy with which to return to bottom line growth over the medium term.
It has focused on engaging in M&A activity, with its strong balance sheet and excellent cash flow providing a great deal of opportunity in this space. Furthermore, the assets it has purchased seem to be very prudent buys, with its focus on treatments for global illnesses such as diabetes which are set to rapidly grow in prevalence in the coming years likely to offer a clear pathway to long term growth.
With AstraZeneca trading on a P/E ratio of just 15.3, it appears to offer excellent value for money. Certainly, its investors may need to be patient because profit growth may not return in the short run but, for investors taking a longer term view, now seems to be the perfect time to buy AstraZeneca — especially since its share price now appears to be exclusive of a bid premium.
Meanwhile, good news was also released today by car sales company Lookers (LSE: LOOK). Trading in its most recent quarter was in-line with expectations and it achieved record monthly performance in September. Crucially, integration of the 30 dealerships acquired through the purchase of Benfield Motor Group is progressing well, with them making a major contribution to the company’s financial performance.
Looking ahead, Lookers is forecast to increase its bottom line by 7% in the current year and by a further 10% next year. Despite this upbeat growth rate, its shares trade on a PEG ratio of only 1.1 and this indicates that they could be due for continued capital growth after posting a rise of 34% year-to-date. As such, now appears to be a good moment to buy a slice of Lookers.
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Peter Stephens owns shares of AstraZeneca. The Motley Fool UK has recommended AstraZeneca. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.