AstraZeneca now Overvalued

Favoured for years by income investor Neil Woodford as an undervalued stock, pharmaceutical company AstraZeneca is now trading above its fair value estimate

Emma Wall 17 January, 2014 | 9:52AM

A decade ago, few investors would touch pharmaceutical stocks. The big drug companies were shunned by investors over fears of a patent cliff. The blockbuster drugs only guaranteed revenue streams for a set amount of time, before the companies were obliged to give up the recipe to the general market.

But long-term investor Neil Woodford saw that pharmaceutical companies could continue to be a healthy source of income - and since then investors in his former fund Invesco Perpetual Income have been rewarded with both dividends and growth. 

It has not been a smooth ride for investors in AstraZeneca (AZN). A steady rise in the share price in 2004 from £18.89 was followed by a crash four years later from £35 to £17.90. But since then it has climbed to £39 today, making it overvalued according to Morningstar equity analysts. 

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
AstraZeneca PLC7,876.00 GBX-0.05

About Author

Emma Wall  is former Senior International Editor for Morningstar

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