AstraZeneca share price has gone vertical; brace for a pullback

AstraZeneca (LON: AZN) share price is firing on all cylinders as it sits on its all-time high. It has soared in the last five consecutive weeks, the longest streak since April 2023. 

Notably, as shown below, the company is outperforming other healthcare companies this year. It has risen by 27% in 2024 while the SPDR Select Fund Health Care (XLV) has soared by over 12.505. 

The Vanguard Health Care ETF (VHT) and the iShares US Healthcare ETF (IYH) have all jumped by less than 15%.

Strong growth continues

AstraZeneca, the biggest company in the UK, with a market cap of over $270 billion, has done well in the past few years.

Its performance is notable for two main reasons. First, unlike Eli Lilly and Novo Nordisk, its performance has happened without it having a major role in the obesity drug. Eli Lilly sells Mounjaro while Novo sells Wegovy and Ozempic. 

Still, the company hopes to become a major player in the industry in the future. For example, analysts believe that it will provide more information about its obesity business in an event in early November.

Astra has pegged its success in this by its acquisition of Eccogene, a company that it bought early this year.

Still, the risk that AstraZeneca faces in this business is that the industry is now getting crowded, with Novo and Eli Lilly having the biggest players. Other companies like Biogen, Amgen, Altimmune, and Viking Therapeutics are working on the drugs. As companies like Google have shown, dislodging a market leader is not an easy thing. 

Second, AstraZeneca share price surge is notable because it happened after the demand for Covid-19 vaccines ended. Many companies that made billions selling vaccines have underperformed. 

A good example of this is Pfizer, which attempted to buy AstraZeneca in 2014. Pfizer shares have crashed by over 47% from its highest point in 2022. This means that AstraZeneca has moved on past the vaccine boom better than Pfizer. 

The most recent annual results show why AstraZeneca share price has surged. Its annual revenue has soared from over $24.3 billion in 2019 to over $45.8 billion in 2023. Its annual profit has risen from over $1.3 billion to $6.4 billion in the same period.

This revenue has been both organic and through strategic acquisitions. It paid $39 billion to buy Alexion Pharma in 2021, $1.8 billion for CinCor Pharma, and $320 million for Neogene Therapeutics.

In contrast, Pfizer has spend more money in buyouts. It spent $43 billion buying Seagen, $6.7 billion for Arena Pharmaceuticals, $11.6 billion for Biohaven, $5.4 billion for Global Blood Therapeutics and $2.26 billion for Trillium Therapeutics. 

In the past 20 years, Pfizer has spent $339 billion in acquisitions, much higher than the company’s current valuation of $150 billion.

A leader in cancer care

The other reason why AstraZeneca share price has soared is that the company has become one of the top names in the cancer industry. In the most recent results, the company said that its oncology business made over $5.3 billion in revenues, making it the most important part of the business.

Astra will likely continue seeing more growth in this division as the number of cancer cases jump globally. The other key revenue source was its rare disease segment whose revenue rose to $2.14 billion. Its Cardiovascular, Renal, and Metabolism (CVRM) revenue rose to $3.16 billion while its respiratory and immunology (R&I) rose to $1.9 billion. 

Therefore, fundamentally, AstraZeneca has more room to grow, which could make the management’s goal of getting to $80 billion revenue figure by 2030 possible. That would mean a big increase from the $45 billion it made last year, which explains why analysts at Morningstar are sceptical. They wrote:

“While we expect the firm will reach the margin goals, we remain sceptical of the 2030 sales target. We believe Astra is likely more bullish on its pipeline than our expectations. In particular, Astra holds many mid-stage cancer drugs that hold strong launch trajectory potential if late-stage data is successful.”

AstraZeneca share price analysis

Turning to the weekly chart, we see that the AZN share price has jumped sharply in the past few consecutive weeks. This rally is mostly because of its strong earnings and its ambitious targets.

As it rose, AZN flipped the important resistance point at 12,602p into a support level, invalidating the double-top pattern that was forming. It was also the upper side of the cup and handle pattern.

AstraZeneca shares have remained above all moving averages. However, there are signs that the stock has gotten highly overbought as the Relative Strength Index (RSI) and the Stochastic Oscillator have moved to the overbought level.

Therefore, while the long-term view is bullish, there is a likelihood that the stock will pull back and retest the support at 12,602p. This is known as a break and retest pattern and is usually a sign of a bullish continuation.