How The Oncology Sector Is Set To Fuel AstraZeneca’s (AZN) Growth

AstraZeneca, a global biopharmaceutical company that develops and commercializes prescription medicines, became a household name during the Covid 19 pandemic thanks to its vaccines. The company makes much more than just Covid vaccines though, which is possible mainly due to its strong emphasis on research & development. Its robust pipeline of innovative drugs and therapies continues to address the unmet medical needs of the global population.

The company’s main products include Tagrisso for lung cancer, Farxiga for diabetes and heart failure, and Imfinzi for various types of cancers. These products help the company generate a significant portion of its revenue in both established and emerging markets. Last year, Tagrisso alone accounted for $6 billion in revenue for the company.

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Its R&D culture and strong product pipeline support its bullish thesis. The company is working on nearly 200 new products, with about 20 of those possibly hitting the market in the next few quarters. The strength of this product pipeline has enabled the company to lead in Oncology, which is driving the recent growth and forms the backbone of our bull thesis.

AZN’s performance in the Oncology sector grew by 19% in the last quarter, accounting for 41% of the company’s total sales. It’s 6 drugs that lead the revenue generation in this segment are all showing consistent growth. Even the worst-performing drug, Lynparza, is growing at 8% while Enhertu continues to grow at a staggering 79%.

By the end of the year, this segment should help the company beat analyst estimates comfortably, eliminating the negativity surrounding the shrinking vaccines and immune therapies business. As the revenue surge from the Covid vaccinations subsides, the vaccination rates have plateaued. Moreover, regulatory challenges continue to post hurdles in progress in the immune therapies segment. The company continues to comfortably beat these challenges, showcasing a strong R&D culture.

AstraZeneca is not on our latest list of the 31 Most Popular Stocks Among Hedge Funds. As per our database, 49 hedge fund portfolios held AZN at the end of the second quarter which was 46 in the previous quarter. While we acknowledge the potential of AZN as a leading investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as AZN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article was originally published at Insider Monkey.