AstraZeneca (LSE:AZN) isn’t your typical development inventory. It’s the most important firm listed on the FTSE 100 but it surely’s additionally a agency that has grand plans to nearly double gross sales over the subsequent 5 years.

Nonetheless, the inventory fell on Thursday 25 July after the corporate launched its H1 outcomes, regardless of the science-led biopharma large elevating its steerage.

Let’s discover why.

Sturdy outcomes, apprehensive market

Whereas buyers in biotech and pharma have been very eager on fat-fighting medication in recent times, AstraZeneca is continuous to generate very spectacular development from its oncology-focused portfolio.

In H1, the corporate’s income rose to $24.6bn, with $12.9bn within the second quarter, pushed by a 22% rise in oncology.

Biopharma, which incorporates CVRM (Cardiovascular, Renal and Metabolism) and R&I (Respiratory & Immunology), noticed revenues enhance by 17%, and gross sales from its uncommon illness unit rose 15%.

Regardless of the constructive income development, AstraZeneca’s shares fell almost 4% on the day of the announcement.

This decline might be partially attributed to higher-than-expected prices, which led to decrease internet revenue margins that fell to 17.2% from 19% in Q1.

The market’s response in all probability additionally displays the present bearish sentiment within the equities market as an entire, the place even sturdy earnings stories are scrutinised for any indicators of weak spot.

However, AstraZeneca has upgraded its full-year steerage. It’s now anticipating each whole income and core earnings per share (EPS) to extend by a mid-teens proportion at fixed alternate charges.

Severe development plans

Within the H1 report, the corporate pointed to a few of its pipeline and new commercialisation developments which can be set to push income increased within the years to the tip of the last decade.

In Could, the corporate set out its plan to realize $80bn in income by 2030, a major leap from the $45.8bn reported in 2023.

This will likely be pushed by 20 new medicines. CEO Pascal Soriot believes every of those new medication or new molecular entities can ship greater than $5bn yearly in peak-year revenues.

What does all this imply?

AstraZeneca is among the many most costly firms on the FTSE 100. It at present trades round 28.4 instances ahead earnings, placing it at a major premium to the index common — round 12 instances.

Nonetheless, we pay a premium for development. And the corporate’s price-to-earnings (P/E) ratio falls to 23.3 instances in 2025 and 20.4 instances in 2026. Keep in mind, that is based mostly on the present price of the inventory.

If AstraZeneca is ready to ship on its income technology targets, then this degree of earnings development is more likely to proceed. Briefly, we might be taking a look at one of many quickest rising shares on the index by way of earnings.

Buyers, nevertheless, must resolve whether or not they’re keen to pay a premium for that development. And with the inventory getting cheaper, that call could have turn out to be barely simpler.

I already maintain AstraZeneca shares in my pension, however I’m actually contemplating shopping for extra.