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Headquartered in Cambridge, United Kingdom, AstraZeneca is a global biopharmaceutical company that researches, manufactures, and sells therapeutic drugs in the following areas: cardiovascular, oncology, renal, metabolism, and respiratory.
The company was founded in 1999, following the merger of two companies: Astra AB, a Swedish pharmaceutical company, and Zeneca PLC, a British bioscience company. The company defines itself as a science-led company, and in 2020 it gained particular public interest as one of the companies that developed, trialled, and successfully released COVID-19 vaccines that would be used in numerous countries around the world.
The 1999 merger quickly established AstraZeneca as one of the biggest pharmaceutical companies in the world. It was dubbed as a ‘merger of equals’ with investors marvelling at the prospects of a global giant ready to pursue dominance in a lucrative industry. One year after the merger, AstraZeneca announced a profit of over $4 billion on revenues of over $15.8 billion.
AstraZeneca has placed a huge focus on research and development, with the company boasting an enviable pipeline of products that perform well in their respective therapeutic areas. Its top-performing products in recent years include Tagrisso, Symbicort, Imfinzi, Farxiga, and Lynparza.
A product of a merger itself, AstraZeneca has also maintained an active portfolio, making strategic acquisitions as well as divestitures. The most notable buys include the 2020 acquisition of Alexion for $20 billion and the 2007 buyout of MedImmune for $15.6 billion. One of its most important divestitures was the $550 million sale of its Small Molecule Anti-Infective Business to Pfizer.
AstraZeneca is cross-listed on 3 exchanges: London, Stockholm, and Nasdaq (US Tech 100). The stock trades under the ticker symbol AZN on all those exchanges.
AstraZeneca Stock History
Since the 1999 merger, AstraZeneca has had one stock split – a 2-for-1 split performed on July 27th, 2015. Typically, stock splits tend to result in increased trading activity on the underlying stock, with cheaper stock prices now attracting the attention of investors.
AstraZeneca is a major player in the important pharmaceutical industry, making its stock one of the must-watch on Wall Street. AZN traded around the $20-handle when the 1999 merger was completed. The price oscillated around that level for a while, but upward momentum picked up pace in early 2005 and subsequently managed to breach the psychological $30-barrier by late 2006. The rally was inspired by a heavy investment in research which resulted in a couple of bestseller products at the time, such as Nexium. The stock then faced numerous headwinds, such as competition from generics, class suits, overpriced buyouts, and the 2008 Great Recession.
The stock then fell back below $20, with a low printed circa of $16 by 2019. Since then, the stock has largely been in a long-term trend, and in July 2020, it managed to hit an all-time high of just above $64 as investors reacted positively to ‘Big Pharma’ stocks leading the way out of the COVID-19-inspired Great Lockdown.
AstraZeneca is the perfect depiction of the slogan: ‘Big Pharma, Big Dividends’. The company has been a generous dividend payer since its founding, making the AstraZeneca stock a lucrative investment choice capable of delivering increased shareholder wealth as well as a source of periodic income.
How to Trade AstraZeneca Stock
Here are some of the factors to consider when trading the AstraZeneca stock:
- Legislative and Taxation issues
AstraZeneca is a major player in a delicate and sensitive industry where legislation and taxation issues have a great impact on the bottom line. With human life at stake, there is close regulatory scrutiny, while success can directly be influenced by legislative factors such as approvals, environmental impact, and patents. As a global company, legislative and taxation issues can significantly vary in different jurisdictions and trigger uncertain revenue projections.
- New Product Rollout
AstraZeneca is driven by constant scientific research and development. This means that hit products are capable of boosting the bottom-line heavily, whereas misses can be a huge source of loss, considering the thorough testing, verification, and approval required to release a new product.
During the development and trial period of a new product (especially flagships), the AstraZeneca stock is also prone to volatility as investors react to both positive and negative headlines. A notable example is the 2017 trials of a lung cancer drug that saw the stock shed over 15% of its value.
AstraZeneca faces tough competition in the highly profitable pharmaceutical and biotechnology industry. Rivals such as Pfizer, Teva, Eli Lilly and Co., Novartis AG, and Johnson &Johnson have the financial and scientific muscle to pose a significant threat to the top-selling products produced by AstraZeneca. Furthermore, competition also comes from manufacturers of generic products that are offered in the market at much cheaper prices.
- Periodic Earnings
AstraZeneca’s fiscal year runs from January to December, and the company releases quarterly and annual earnings reports to update investors on their business performance and future outlook. Usually, positive fundamentals will inspire higher prices, while negative fundamentals will pressure the stock lower.
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