AstraZeneca (LSE:AZN) yesterday announced the trial results of its Covid-19 vaccine in partnership with Oxford University. Despite this major breakthrough, the AstraZeneca share price is down 2% since the announcement.
There have been some significant developments in the last week regarding the Covid-19 vaccine. Pfizer and BioNTech announced their vaccine last week. US biotech firm Moderna confirmed their own vaccine shortly after.
According to interim data released by AstraZeneca and Oxford University, its vaccine provides 70% protection. Researchers say the figure may be as high as 90% by tweaking the dose. The initial report of 70% effectiveness may be the reason the AstraZeneca share price is down this week. These results came after the Pfizer and Moderna vaccines showed nearly 95% protection.
AZN’s, however, could possess key advantages over other vaccines as it is far cheaper and easier to store. The UK government has pre-ordered 100m doses and AZN has confirmed it will make 3bn doses for the world next year.
AstraZeneca share price and performance
You could be forgiven for thinking a Covid-19 vaccine may propel AZN’s share price upwards. It has actually dipped slightly. This could be a potential opportunity to buy in my opinion as I do like AZN as a company and the vaccine breakthrough appeals to me further.
Since the market crash low of 6221p per share, AZN has seen a nearly 30% increase in its share price value. Due to the pandemic, medical products and medicines have been in high demand. AZN’s recent Q3 results confirm that newer products are boosting sales massively. For the first nine months of 2020, total sales increased by a healthy 9%. Within that figure, new medicines saw a chunky 34% increase. In simple terms, new medicines have generated more than 50% of total sales this year so far.
At this moment, the Astrazeneca share price means buying a single share for over £80. This can be seen as pricey, but at the same time I remind myself that AZN is a FTSE 100 top performer. At its current price point, AZN’s price to earnings (P/E) ratio is currently 43. This is substantially higher than other FTSE 100 stocks.
The Covid-19 news is excellent for AZN for a few reasons. It shows that the R&D department is earning its keep. New medicine sales figures support that claim in my opinion. Furthermore, AZN has shown flexibility in partnering with a smaller organisation. They have together created a significant humanitarian solution to a pandemic the likes of which many of us have never seen. The vaccine seems to have cost and storage benefits compared to its counterparts.
At this moment I see some value in the AstraZeneca share despite it being pricey. I firmly place AZN into my FTSE 100 champion category. It has made a huge breakthrough and continues to be a leader within its industry and perform admirably even in an economic downturn. Despite the fact AZN stands to make no profit from the vaccine, the future bodes well. If I am looking to spend a little less, however, I do have an alternative FTSE 100 pick.
Jabran Khan 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.