An analyst has a suggestion for AstraZeneca PLC (AZN, Financial) shareholders concerned about negative publicity about the company's Covid vaccine: relax.
The safety concerns about the British pharmaceutical giant's Covid shot are probably overblown, according to a New York Times article. AstraZeneca may be suffering a whirlwind of negative publicity about its vaccine, but Jefferies analysts suggest investors should focus on the company's rich pipeline and powerful cancer business.
Fierce Pharma reported that Jefferies analysts wrote that AstraZeneca is on an "impressive revenue and profit trajectory" that's "compelling" compared with other large European pharma companies.
But the subject of Covid-19 generates headlines, and investors and the general public are highly attuned to any news about the virus. The media has highlighted news that more than a dozen countries have either partially or fully stopped using the vaccine after blood clots and bleeding disorders occurred in some recipients. Most nations said they were doing so as a precaution until leading health agencies could review the cases.
One thing working in AstraZeneca's favor is that blood clots have not been shown to be a side effect of the vaccines, according to Daniel Salmon, director of the Institute for Vaccine Safety at Johns Hopkins University. In addition, about 300,000 to 600,000 people a year in the United States develop blood clots in their lungs or in veins in the legs or other parts of the body, according to the Centers for Disease Control and Prevention. That's why health authorities think the cases reported in vaccine recipients are probably coincidental.
It seems that the safety questions about the AstraZeneca vaccine are much ado about nothing. Analysts preferred to focus on the positives, emphasizing the company's cancer treatments are poised to generate "megabillions" in sales. Lung cancer drug Tagrisso is expected to hit peak revenues of about $14 billion by itself.
And that's not all. Analysts project the company's breast cancer drug Lynparza should contribute $5.5 billion to the top line, while Imfinzi for lung cancer may be effective in treating other cancers.
They also like the benefits of AstraZeneca's $39 billion purchase of Alexion Pharmaceuticals Inc. (ALXN, Financial), which is expected to close in the third quarter, giving the company access to the rare disease market and funds to boost research and development. Analysts also think that among European pharma companies, the company is best suited to capitalize on China's health care reforms.
As to the Covid vaccine, AstraZeneca's shot is expected to generate $1 billion in sales this year but make little contribution to the company in 2024 and beyond.
At just under $50, AstraZeneca's shares are relatively flat for the year. CNN Money reported that at its current price, the company is trading at its low target. Its median target is $65.85 and the high nearly $79. It is rated a buy.
Disclosure: The author has no position in any of the companies mentioned in this article.
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