ii view: AstraZeneca growth boosted by cancer drug demand

Targeting high sales growth by 2030 and investing heavily in its biggest market, the USA. Buy, sell, or hold?

29th July 2025 11:16

Keith Bowman from interactive investor

Second-quarter results to 30 June

Currency adjusted revenue up 11% to $14.46 billion
Currency adjusted core earnings per share (EPS) up 12% to $2.17
Interim dividend up 3% to $1.03 per share

Guidance:

Continues to expect full-year revenue to increase by a high single-digit percentage
Continues to expect core EPS for the full year to rise by a low double-digit percentage
Targeting a total annual 2025 dividend payment of $3.20 per share, up from 2024’s $3.10 per share

Chief executive Pascal Soriot said:

"Our strong momentum in revenue growth continued through the first half of the year and the delivery from our broad and diverse pipeline has been excellent.

“As we enter our next phase of growth, we have pledged $50 billion to continue to grow in the US, which includes the largest manufacturing investment in AstraZeneca's history, set for Virginia.”

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ii round-up:

AstraZeneca (LSE:AZN) today detailed sales and profit that broadly matched City forecasts, with the drug maker reiterating its ambition to deliver $80 billion of annual revenues by 2030 versus $54.1 billion in 2024.

A near one-fifth increase in cancer drug related sales to $6.3 billion pushed second-quarter revenue up 11% from a year ago to $14.46 billion. Adjusted, or core earnings improved 12% to $2.17. The Cambridge headquartered company reiterated full-year estimates for a high single-digit percentage gain in sales and a low double-digit percentage rise in core earnings.

Shares in the UK’s biggest company by stock market value rose 1% in early trading having come into these latest results up 3% so far in 2025. That’s similar to major UK rival GSK (LSE:GSK). The FTSE 100 index is up 10% year-to-date.

AstraZeneca’s medicines focus on the areas of Oncology, or cancer, as well as Cardiovascular, Renal and Metabolic (CVRM) illnesses and other rare diseases.

CVRM related sales, including the group’s Farxiga drug used to treat diabetes and heart and kidney diseases, rose 3% on a currency adjusted basis to $3.26 billion. Rare disease treatment sales climbed 7% to $2.29 billion.

Astra flagged 12 positive Phase III study readouts in just the past few weeks. These included baxdrostat to treat high blood pressure and gefurulimab to treat the rare disease of myasthenia gravis, causing a loss of muscle function.

The City continues to await a late-stage trial of the group’s potential blockbuster drug Datroway, used to treat lung cancer. Broker Morgan Stanley reiterated its ‘overweight’ stance on AstraZeneca shares post the results.

The interim dividend rises 3% to $1.03 per share, with management targeting a total annual 2025 dividend payment of $3.20 per share, up from 2024’s $3.10 per share. Third-quarter results are scheduled for 6 November.

ii view:

Founded in 1999 through a merger, the Anglo-Swedish pharmaceutical and biotechnology company today operates in over 100 countries. The USA generated most sales in 2024 at 40%. Astra is investing $50 billion in the US including its largest ever manufacturing investment in Virginia. That was followed by China at 12% of sales, the UK at almost 9%, and other various countries making up the balance.

For investors, government pressures to reduce drug sale prices, including within its biggest market the US, are not to be forgotten. Legal proceedings are considered typical for the pharmaceutical business, including litigation and government investigations. Previous takeovers, such as the $1.05 billion purchase of rare endocrine disease specialist Amolyt Pharma, are not without risk, while GSK shares currently offer a forecast dividend yield of just over 4.5% compared to 2.2% at Astra.

More favourably, cancer treatment sales remain robust, accounting for almost 44% of overall revenues during this latest quarter. Hopes for its Datroway cancer drug persist with Astra’s experience, with diabetes also offering insight into potential weight management medicines. Sales on a geographical basis are diverse, with sales to emerging markets and excluding China coming in at 14% of overall sales during this quarter, while takeovers such as the group’s 2021 purchase of rare disease focused Alexion have expanded the company’s diversity of drug treatments.

On balance, and despite ongoing risks, management’s 2030 sales ambition and a consensus analyst fair value estimate above £137 per share should see investors remain supportive of this major UK drug developer and manufacturer.

Positives:

Ongoing drug development
Acquisitions adding to diversity of drug treatments

Negatives:

Involved in various legal proceedings considered typical to its business
Currency movements can hinder

The average rating of stock market analysts:

Buy

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