AstraZeneca’s (LSE: AZN) share price has fallen considerably from its 3 September one-year traded excessive of £133.38.

A few of this drop resulted from an investigation of its Chinese language enterprise. The agency stated in its Q1 2025 outcomes launched on 29 April that this stays ongoing and it’s cooperating with Chinese language authorities.

To date, it has solely acquired a discover for suspected unpaid importation taxes of $1.6m. And it reiterated that no unlawful acquire has been made by the corporate.

One other aspect within the share price fall since September was the two April imposition of US tariffs on buying and selling companions.

Each elements stay dangers for my part. Nevertheless, as a perennial personal investor my focus is on the long run.

How does the core enterprise look?

The important thing to the long run well being of any agency is its earnings development. In AstraZeneca’s case, consensus analysts’ forecasts are that its earnings will develop by 14.5% yearly to end-2027 at minimal.

Its Q1 outcomes noticed income rise 10% yr on yr to $13.588bn, whereas earnings per share (EPS) jumped 32% to 188 cents. Income is a agency’s whole revenue, whereas earnings are what stays after bills have been deducted.

For 2025, the corporate reiterated income steering of excessive single-digit proportion development and low double-digit development in EPS. 

It additionally restated its goal of delivering $80bn in income by 2030.

Are the shares undervalued?

Earnings development is the engine that drives a agency’s share price over time. And the better the hole between its present price and its truthful worth, the extra revenue potential there may be, in my expertise.

The start line for my evaluation of that is to distinction a agency’s key inventory measures with its opponents.

AstraZeneca’s price-to-sales ratio of 4 is backside of its peer group, which averages 9.7, so it is vitally undervalued right here. These companies comprise AbbVie at 6, Novo Nordisk at 6.5, Pfizer at 8.7, and Eli Lilly at 17.6.

It additionally appears very undervalued on the price-to-earnings ratio, at which it trades at 28.4 in comparison with a competitor common of 52.

And the identical will be stated of its 5.4 price-to-book ratio towards the 44.3 common of its friends.

To place these numbers into share price phrases, I flip to the second a part of my analysis. This identifies the price at which any inventory needs to be buying and selling, based mostly on future money circulation forecasts for a agency.

The resultant discounted money circulation analysis for AstraZeneca exhibits its shares are 64% undervalued at their present £107.37 price.

Subsequently, their truthful worth is £298.25, though market whims may push them decrease or greater.

Will I purchase extra of the inventory?

AstraZeneca is among the few shares with out a very excessive yield that I nonetheless maintain (it yields simply 2.2%). Aged over 50 now I deal with shares that pay excessive dividends so I can proceed to cut back my working commitments.

The important thing cause why I nonetheless have them is their sturdy earnings development potential over the quick, medium, and long run. This could energy the share price a lot greater over time and the dividend too.

Consequently, I can be including to my holding whereas the price appears so low cost to me.