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The AstraZeneca share price is reassuringly expensive. I’d buy it in a Stocks and Shares ISA

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The AstraZeneca (LSE: AZN) share price has been one of the very best performers on the FTSE 100 during the Covid-19 stock market crash. Amid the global health crisis, pharmaceutical companies have really proven their worth.

AstraZeneca is up another 3% today after reporting a 12% rise in total first-half revenues to £9.57bn. Core earnings per share rose 24% year-on-year to $2.01. These are the type of results most companies can only dream of right now, and the AstraZeneca share price is flying as a result. It’s up 15% over the last six months, but this is no coronavirus flash in the pan. Over five years, it’s more than doubled.

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This success wasn’t inevitable. When Pascal Soriot was appointed chief executive in October 2012, he inherited a seriously troubled company. The group’s drugs pipeline was depleted, key brands had lost exclusivity, and both revenues and profits were down sharply.

The AstraZeneca share price is a winner

He warned the full turnaround would take until 2024, but things have moved ahead of schedule. Today, he reported “further progress with our pipeline, highlighted by the overwhelming success of Tagrisso in the ADAURA trial and with Farxiga.”

New medicines revenues have done particularly well, growing 42% to $6.35bn, and at an even more impressive 71% in emerging markets to $1.41bn. Total first-half revenues are up 13% in the US to $4.18bn, and 17% in Europe to $2.45bn.

While the pandemic brings “heightened risks and uncertainties,” it’s bought opportunities too, as AstraZeneca works on a vaccine. It now has the capacity to deliver more than two billion doses of AZD1222, and is trialling Calquence and Farxiga to treat patients affected by the virus.

Don’t expect a surge in the Astrazeneca share price as a result, as the company’s said it won’t profit from the vaccine during the pandemic.

While the global economy is clouded in uncertainty amid second-wave fears, AstraZeneca is a rare patch of blue sky. However, there’s a price to pay for its success. It now trades at a forward valuation of 27 times earnings, almost double its valuation five years ago.

FTSE 100 stock market crash survivor

As the AstraZeneca share price rises, the yield inevitably falls. Right now, it offers a forecast 2.6%, covered 1.4 times. With more than 200 UK companies suspending their dividend payouts during the crisis, this still looks attractive. You can take this tax-free inside your Stocks and Shares ISA allowance.

Total revenue guidance for the rest of the 2020 financial year is unchanged, and is expected to increase by a high single-digit to a low double-digit percentage.

AstraZeneca’s exciting new pipeline of drugs makes for a strong buy case. As does its defensive capabilities during these uncertain times.

This is a premium FTSE 100 stock with a premium valuation. You could wait for it to get cheaper, but you may have to be patient. Buy to hold, and watch your wealth build over time.

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Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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