We recently compiled a list of the 10 Best UK Stocks to Invest in Now. In this article, we are going to take a look at where AstraZeneca PLC (NASDAQ:AZN) stands against the other best UK stocks.
The OBR (Office for Budget Responsibility) anticipates economic output in Britain to expand by 1.8% in 2026 and by 1.5% in 2027. In September 2024, KPMG reported that The Bank of England might take a more cautious approach when it comes to easing monetary policy as compared to the Fed and the ECB, with gradual cuts resulting in the UK base rate to 3.5% by 2025 end.
Furthermore, the labour market will continue to loosen, with fewer vacancies, and subdued pay growth but a relatively modest rise in the unemployment rate. KPMG went on to add that business investment might see some recovery next year if geopolitical uncertainties ease and the impact of reduced rates and the improving growth outlook offer businesses the confidence to commit to their investment plans.
What to expect from the UK Economy?
As per the new EY ITEM Club Autumn Forecast, the UK economy should grow 0.9% in 2024, down from the 1.1% growth expected in July’s Summer Forecast. The downgrade exhibits that household savings are now lower than expectations, providing less scope for consumers to increase their spending. Furthermore, lower-than-anticipated increases in consumer spending, together with cautious rate cuts to the Bank Rate, demonstrate that UK growth is expected to be steady rather than rapid over the upcoming 2 years.
EY added that business investment is expected to accelerate moderately in the coming years, with rate cuts providing a boost to the private sector. Therefore, the UK business investment should grow to 1.3% in 2024, an increase from the 1% expected earlier. Private sector investment is anticipated to accelerate to 3% in 2025, demonstrating a small downgrade from projections of 3.2% growth in its Summer Forecast.
Inflation Outlook for the UK Economy
EY expects that inflation is expected to average 2.6% in 2024 before falling marginally to 2.5% in 2025 and 2.1% in the following year. The firm believes that this ‘stickiness’ is because of several factors, such as tightness in the broader labour market, and the gradual slowing of pay growth. With spending growth anticipated to be lower than the earlier expectations because of reduced household saving rates, it projects consumer spending to rise by 0.8% in 2024.
EY expects that gradual cuts to the Bank Rate might provide some benefits to the UK’s housing market. It projects house price growth of 1.7% in 2024, and 2.1% in 2025, with declining borrowing costs anticipated to help offset other affordability challenges. Notably, the looser monetary policy is expected to have a modest impact on growth over the short term. Several borrowers on fixed rates will not experience the decline in their mortgage payments and a significant minority might refinance a fixed mortgage to a higher rate, despite a decline in Bank Rate.
Our Methodology
To list the 10 Best UK Stocks to Invest in Now, we used a screener to extract UK stocks. Next, we narrowed our list by selecting the ones having high hedge fund holdings. Finally, the stocks were ranked in an ascending order of their hedge fund sentiments, as of Q2 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
The trading floor of Pacific Investment Management Company LLC with traders focusing on the global fixed income markets.
AstraZeneca PLC (NASDAQ:AZN)
Number of Hedge Fund Holders: 49
AstraZeneca PLC (NASDAQ:AZN) is a biopharmaceutical company, which focuses on the discovery, development, manufacture, and commercialization of prescription medicines. It has its headquarters in Cambridge, the United Kingdom.
AstraZeneca PLC (NASDAQ:AZN)’s growth is expected to be led by 3 factors. These are patents, economies of scale, and a powerful distribution network. The company has a strong focus on oncology products and strategic expansion into new therapeutic areas. Its product lineup is anchored by its oncology offerings, with drugs including Enhertu, Tagrisso, and Imfinzi as key differentiators. AstraZeneca PLC (NASDAQ:AZN)’s supplemental New Drug Application (sNDA) for CALQUENCE® (acalabrutinib) was accepted and granted Priority Review in the US for the treatment of adult patients with previously untreated mantle cell lymphoma.
The company has seen numerous product approvals throughout various therapeutic areas. European regulators recommended approval for an endometrial cancer treatment. Also, they have accepted an application for COVID-19 pre-exposure prophylaxis in immunocompromised patients. Furthermore, in China and Japan, Tagrisso has received approval as a first-line treatment for EGFR-mutated advanced lung cancer.
Wall Street analysts remain optimistic about AstraZeneca PLC (NASDAQ:AZN)’s strategic initiatives, which include pursuing strategic acquisitions to bolster its growth prospects. Some of the recent acquisitions are Amolyt Pharma and Fusion Pharmaceuticals. These should enhance AstraZeneca PLC (NASDAQ:AZN)’s portfolio and pipeline. AstraZeneca PLC (NASDAQ:AZN) remains focused on expanding its breast cancer franchise and moving antibody-drug conjugates into earlier lines of therapy in a bid to replace standard chemotherapy.
TD Cowen upped its price target on shares of AstraZeneca PLC (NASDAQ:AZN) from $90.00 to $95.00, giving a “Buy” rating on 12th August. Parnassus Investments, an investment management company, released the Q2 2024 investor letter. Here is what the fund said:
“AstraZeneca PLC (NASDAQ:AZN) gained after announcing robust first-quarter results and setting 2030 targets at an Investor Day that were above consensus expectations. We continue to believe that AstraZeneca’s robust pipeline and industry-leading innovation in oncology should support above-expectation revenue growth for the next several years.”
Overall, AZN ranks 2nd on our list of the 10 Best UK Stocks to Invest in Now. While we acknowledge the potential of AZN as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than 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 is originally published at Insider Monkey.