AstraZeneca Stock: NYSE Listing, the $80bn Target and Valuation

The short answer is that the money is in America. The US produced 42% of AstraZeneca's first-half revenue, $12.9 billion, more than Europe and China combined. American investors used to own the company through American depositary receipts (ADRs), certificates that represent foreign shares, listed on Nasdaq. Two ADRs equalled one ordinary share. The ADR programme ended and the ordinary shares now trade under the ticker AZN on the NYSE, the London Stock Exchange and Nasdaq Stockholm. The NYSE called it the largest company transfer by market value in its history.

Chair Michel Demaré said the move "gives broader access to the largest capital market in the world." The point is to make it easier for US funds that don't hold ADRs, and for US retail investors, to own the stock.

For holders the practical changes are small. Americans now own the same ordinary share as London holders, and the dividend is declared in dollars. The interim dividend just paid was $1.06 a share (79.5p), and the company intends to raise the full-year payout to $3.30. Because settlement cycles differ, the ex-dividend date in New York can fall a day later than in London and Stockholm, and the company tells shareholders not to move shares between markets around those dates.

What does it mean for London?

Nothing changed on paper. AstraZeneca stays in the FTSE 100, the index of the London market's 100 largest companies. But it is a symbolic loss. AstraZeneca was the FTSE 100's largest company by market value last year. It is now third, at £188.9 billion, behind HSBC at £241 billion and Shell at £208.9 billion. The worry in the City is that trading, research coverage and, one day, the primary listing drift towards New York. That fits a wider pattern we cover in companies leaving the London Stock Exchange.

Is AstraZeneca on track for $80 billion in revenue?

So far, yes. Total revenue was $58.7 billion last year, up 8% at constant exchange rates (CER, which strips out currency moves), and core EPS rose 11% to $9.16. For this year the company guides to mid-to-high single-digit revenue growth and low double-digit core EPS growth, both at CER. In the first half revenue rose 6% at CER, held back by two specific problems: generic copies of the diabetes drug Farxiga in the US and volume-based procurement (VBP) in China, where the state buys drugs in bulk tenders at steep discounts.

Cancer and rare disease are carrying the growth

Oncology$14.1B +15%

Heart, kidney, metabolism$6.1B −12%

Rare disease$4.9B +11%

Respiratory, immunology$4.8B +9%

Infectious disease$0.3B −26%

First-half total revenue by therapy area, with growth at constant exchange rates. Source: AstraZeneca half-year results.

The guidance is consistent with the goal. Excluding Farxiga and the heart drug Brilinta, which are losing patent protection, first-half revenue grew 11%. Chief executive Pascal Soriot told investors the target "assumes successes and setbacks" and that more than 20 high-value trial readouts are due over the next 18 months.

Make a guess

Starting from last year's $58.7 billion, what yearly growth rate gets AstraZeneca to $80 billion in five years?

Tap your guess

0–4%Your guess4–8%Your guess8–12%Your guess12–16%Your guess

0123456789.0123456789%Needed each year

Spot on.Close, a little low.Close, a little high.Way off, too low.Way off, too high. It was 6.4%.

About 6.4% a year. First-half growth was 6% at CER, or 9% in reported dollars, with two big drugs going generic. The target is demanding but not heroic.

Needed each year6.4%

First-half growth at CER6.0%

How big is AstraZeneca's cancer business?

Oncology made $14.1 billion in the first half, 46% of revenue, up 15% at CER. Four drugs matter most.

• Tagrisso, a pill for lung cancer with an EGFR mutation, is the biggest at $3.78 billion, but growth has slowed to 6% as China's market gets more competitive.
• Imfinzi, an immunotherapy, grew 29% to $3.55 billion on new uses in bladder and stomach cancer.
• Enhertu, an antibody-drug conjugate (ADC) shared with Japan's Daiichi Sankyo, grew 32% to $1.72 billion on AstraZeneca's books. An ADC is an antibody that carries chemotherapy straight to tumour cells. Combined sales booked by both partners were $2.96 billion, up from $2.29 billion.
• Datroway, a second Daiichi ADC, is still tiny at $98 million, but more than six times last year's level as uptake grows in breast and lung cancer.

Imfinzi and Enhertu are growing five times faster than Tagrisso

Tagrisso$3.78B +6%

Imfinzi$3.55B +29%

Calquence$1.94B +16%

Enhertu$1.72B +32%

Lynparza$1.61B −1%

Truqap$0.43B +41%

Datroway$0.10B >6x

First-half revenue and growth at constant exchange rates. Source: AstraZeneca half-year results.

The mix explains why profits are outrunning sales. In the latest quarter revenue rose 5% at CER but core EPS rose 18%. Can you spot why?

Find the cause

Latest quarter: revenue up 5%, core EPS up 18%. Which line explains most of the gap?

AstraZeneca, latest quarter vs a year earlier

Alliance revenue from partners rose 33% Core operating margin rose 2 points to 34%, with gross margin up a point to 84% China revenue fell 13% The interim dividend rose 3 cents

Tap the phrase you think is the tell.

Spotted it.Not that phrase. Margin expansion did most of the work. Core R&D (24% of revenue) grew in line with sales, and core SG&A (26%) grew more slowly.

• “Alliance revenue from partners rose 33%” It helped, but alliance revenue is under 6% of the total.
• “Core operating margin rose 2 points to 34%, with gross margin up a point to 84%” Right. Each dollar of sales kept more profit, as costs grew slower than revenue.
• “China revenue fell 13%” That hurt growth. It doesn't explain the profit gain.
• “The interim dividend rose 3 cents” Dividends are paid out of profit. They don't create it.

Explain every phraseHide the other explanations

What's in AstraZeneca's pipeline, and what went wrong?

The pipeline is huge: 183 projects, 21 new molecular entities (new drugs, not new uses) in late-stage trials and four under regulatory review. The first half brought six positive Phase III trials and eight first approvals in major markets. The most important new launch is Baxfendy (baxdrostat), a first-in-class blood-pressure pill approved in the US. Elecoglipron, an oral weight-loss pill, cut body weight by 10.5% at 26 weeks in a mid-stage trial, against 0.6% on placebo.

There were misses too, and the market noticed. Wainua failed its big heart trial, CARDIO-TTRansform, in a rare heart disease called ATTR-CM. Then camizestrant (sold as Etcamah) missed its main goal in SERENA-4, a 1,371-patient trial in first-line breast cancer. It remains approved for a narrower group of patients whose tumours develop an ESR1 mutation.

A year of wins and misses

1. Start of yrShares list on the NYSEValued at about $294B
2. First halfBaxfendy approved in the USFirst-in-class hypertension pill
3. Mid-yrWainua heart trial failsCARDIO-TTRansform misses its main goal
4. Mid-yrBristol Myers reportShares drop about 9% in a day
5. Last monthSERENA-4 missesCamizestrant in first-line breast cancer
6. Recently$2B into Summit12% stake to pair ivonescimab with its ADCs

Most recently, AstraZeneca put $2 billion into Summit Therapeutics for a 12% stake, to test Summit's PD-1xVEGF antibody ivonescimab alongside its own ADCs. It is a cheaper bet than buying the whole company, and a sign management sees combinations with its ADCs as the next leg of cancer growth.

How exposed is AstraZeneca to US drug pricing and tariffs?

Very, which is why it struck a deal early. Last year AstraZeneca became the second drugmaker, after Pfizer, to sign a most-favoured-nation (MFN) agreement with the Trump administration. MFN means matching the lowest price paid in other rich countries. According to the White House fact sheet, every state Medicaid program gets MFN prices, all new medicines launch at MFN prices, and AstraZeneca sells some drugs directly to patients at deep discounts. In return, AstraZeneca got a three-year exemption from threatened 100% tariffs on imported medicines, tied to a $50 billion plan to invest in US manufacturing and research by the end of the decade.

AstraZeneca traded US prices for tariff relief

What AstraZeneca gavePricing

• MFN prices for all Medicaid programs
• MFN prices on every new launch
• Deep direct-to-patient discounts
• $50B of US investment

vs

What AstraZeneca gotCertainty

• Three years free of the threatened 100% tariff
• Deal terms kept confidential

The centrepiece is a $4.5 billion plant in Virginia making ingredients for chronic disease and cancer medicines. A new research centre in Cambridge, Massachusetts, part of more than $1 billion of investment in the state, has just opened. AstraZeneca now has 24 US sites and more than 25,000 US employees. The half-year report says pricing adjustments under the US government agreement weighed on gross margin, but margins still rose overall. The bigger hit to US revenue so far is generics: US Farxiga revenue fell 17%.

What's going on with AstraZeneca in China?

China produced $3.5 billion of first-half revenue, 11% of the total, and fell 5% at CER, or 13% in the latest quarter, as VBP and generics hit Farxiga, Lynparza and the anaemia drug roxadustat. There is also a criminal case. Leon Wang, who ran the China business for about a decade, was detained two years ago. Earlier this year prosecutors charged him, another former employee and AstraZeneca's China subsidiary over illegal collection of personal data and illegal drug imports, with insurance fraud charges against the two individuals only.

AstraZeneca has doubled down anyway. During then prime minister Keir Starmer's visit to Beijing earlier this year it announced $15 billion of investment in China by the end of the decade, mainly in cell therapies and radioconjugates. It keeps licensing drugs from Chinese companies too. The latest examples are a $600 million upfront deal with Dizal for the lung cancer drug Zegfrovy and a $200 million upfront licence with a Sino Biopharmaceutical subsidiary.

Why did AstraZeneca pull back from UK investment?

Early last year AstraZeneca scrapped a £450 million vaccine plant at Speke, near Liverpool, blaming a smaller government support offer. Later it paused a £200 million ($262 million) research expansion in Cambridge that was meant to create 1,000 jobs. A couple of months earlier it had promised $50 billion to America.

The deeper fight was about VPAG, the UK scheme under which drugmakers pay back a share of NHS sales of branded medicines. The rate for newer medicines hit 22.9% last year. After a UK–US agreement, Britain agreed to pay 25% more, net, for new medicines and to keep the rebate at or below 15%, and UK drug exports were exempted from US tariffs. This year's rate came in at 14.5%.

The UK cut its drug rebate by more than a third

510152025%0

22.9%

14.5%

Last yrThis yr

For shareholders, the UK row matters less than it looks. Europe is 22% of revenue and the UK a fraction of that. The real lesson is about leverage: governments that want AstraZeneca's factories have to pay for its drugs.

Why has AstraZeneca's share price fallen this year?

Three blows landed close together. Reports of merger talks with Bristol Myers Squibb sent the shares down about 9% in a day, its biggest one-day fall in about six years. Shareholders questioned why a growth leader would buy a company facing patent expiries on its biggest drugs. A senior source then said there were "no discussions" and the stock bounced. The Wainua miss came out with the half-year results, and SERENA-4 followed.

Earnings up, price down

15%Fall in market value since NYSE debut$294B to $249.5B

9%One-day drop on merger reportsBiggest in about six years

12%First-half core EPS growthTo $5.21

None of these changed this year's numbers much. Guidance was reconfirmed after the Wainua miss. What changed is confidence in growth after the end of the decade, as today's biggest drugs age. Soriot recently said AstraZeneca can keep growing beyond that point without a large acquisition: "We absolutely have what we need."

Is AstraZeneca stock cheap compared with Lilly, Novo, Roche and GSK?

A forward P/E divides the share price by analysts' expected earnings over the next year. On that measure AstraZeneca trades at about 14.9 times, below Roche and far below Eli Lilly. Against last year's core EPS of $9.16, the $160.12 share price is about 17.5 times.

EV/EBITDA is enterprise value (market value plus net debt) divided by operating profit before depreciation and amortization. Stockanalysis data at the latest close for Lilly, Novo, GSK and Roche.

AstraZeneca now trades closer to GSK than to Lilly

Eli Lilly28.5x

Roche16.6x

AstraZeneca14.9x

Novo Nordisk11.9x

GSK9.6x

Forward price-to-earnings ratios at the latest close. Source: Stockanalysis.

Each comparison tells you something. Lilly's premium is the price of its weight-loss franchise. Novo's forward P/E is higher than its trailing P/E of 9.5, which means analysts expect its earnings to fall. GSK trades as a slow grower, at under 10 times. Roche is the closest peer, a large cancer and diagnostics group, and it trades at a modest premium. AstraZeneca guides to low double-digit EPS growth this year, so a mid-teens multiple is undemanding if that growth continues. The balance sheet is not a constraint either: net debt of $26.9 billion is about 1.3 times annualized first-half EBITDA of $10.7 billion.

Steady growth at today's multiple beats the current price

Pick core EPS growth for the next three years and the P/E the market pays at the end

Core EPS growth a year

5%9%13%

P/E on core EPS

12x15x18x21x

Share price in three years$127$159$191$223$142$178$214$249$159$198$238$278

−20.6%−0.6%+19.4%+39.4%−11.3%+11.3%+33.8%+55.6%−0.6%+23.8%+48.8%+73.8%below Price at the latest closebelow Price at the latest closeabove Price at the latest closeabove Price at the latest closebelow Price at the latest closeabove Price at the latest closeabove Price at the latest closeabove Price at the latest closebelow Price at the latest closeabove Price at the latest closeabove Price at the latest closeabove Price at the latest close

Price at the latest close $160

$127$278

At 12 times, every growth case ends at or below today's price. At 15 times or more, only 5% growth fails to beat it. At 9% growth and 15 times, the stock reaches about $178 before dividends.

What could go wrong?

Patent expiries are the main long-term risk. US Farxiga shows how fast revenue goes once generics arrive, and the pipeline has to replace today's biggest drugs. Two big trial failures in one year show it won't always deliver. US pricing could tighten further despite the MFN deal, and the tariff exemption lasts only three years. China could bring bigger fines or slower sales. Net debt rose $3.5 billion in the first half to $26.9 billion as AstraZeneca paid for deals, and a large acquisition would raise it again.

Check the claimThree claims about AstraZeneca, tested

ClaimThe NYSE listing means AstraZeneca is leaving London.Tap to checkMythIt stays listed in London and in the FTSE 100. What changed is that US investors now own the same ordinary shares.Flip backClaimThe $80 billion target is out of reach.Tap to checkMythIt needs about 6.4% a year from last year's $58.7 billion. First-half growth excluding two fading drugs was 11%.Flip backClaimThe stock is cheap because the business is weakening.Tap to checkPartly trueFirst-half core EPS rose 12%. The derating reflects trial misses and merger fears more than current earnings.Flip back

Our read

AstraZeneca's NYSE listing was about access to American money, not an exit from London. For shareholders it changed little. For the City it is a loss of prestige that the FTSE 100 can live with.

The business is in good shape. Oncology grows in the mid-teens, margins are rising and guidance holds despite generic Farxiga and Chinese price cuts. The $80 billion goal needs about 6.4% a year, which looks achievable on current growth.

The market has marked the stock down for things that don't change near-term earnings: a merger rumour that was denied, and two trial misses in drugs that were upside, not the core. US pricing and China are real risks, but the MFN deal has made US pricing more predictable, and China is 11% of sales.

Our view: at about 15 times forward earnings, AstraZeneca is attractively priced for a company growing core EPS at low double digits. We would rather own it than chase Lilly, and we think it deserves a higher multiple than GSK or Novo. The catalysts to watch are the 20-plus readouts due over the next 18 months. A couple of clear wins would likely be enough to re-rate the shares.

Go deeper

• Valuation and expectations: work out what a forward P/E of about 15 already assumes about AstraZeneca's growth after its patents expire.
• Risk and scenarios: build the bull, base and bear cases for a pipeline with 20-plus readouts ahead, as in our scenario figure.
• Segment reporting: read a results table by therapy area and region to separate growth drivers from fading drugs like Farxiga.

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