FTSE 100 shares have largely rebounded from their lows. The truth is, scanning via the index earlier, I used to be shocked how sturdy the rally has been. That’s within the context of declining UK and international progress forecasts in gentle of recent US commerce coverage.

Nonetheless, one inventory that’s but to get well is the index’s largest firm — AstraZeneca (LSE:AZN).

Trump’s commerce coverage

Donald Trump has pledged to impose main tariffs on imported prescription drugs, aiming to encourage drugmakers to relocate manufacturing to the US. Whereas Trump argues these tariffs will convey manufacturing again and bolster home jobs, business specialists warn they may drive up drug costs for People and disrupt established international provide chains. European pharmaceutical firms, a lot of whom already manufacture within the US, have expressed concern.

AstraZeneca shares have mirrored this uncertainty, dropping round 8% over the previous month. In any case, decreased entry to the US market, larger tariffs, or being pressured to take a position extra in US manufacturing amenities wouldn’t be good for enterprise. Current figures counsel that AstraZeneca generates 42% of its gross sales within the US, however solely producers 22% of its merchandise there. 

After all, my hunch is that these tariffs will ultimately be restricted. The associated fee to the American individuals, within the brief and medium time period no less than, could be huge. Paying extra for already costly medicine is just not a vote winner.

What the numbers say

AstraZeneca’s present valuation displays each its sturdy earnings progress and the sector’s defensive attraction. The ahead price-to-earnings (P/E) ratio is forecast to say no from 29.1 instances in 2024 to 22.9 instances in 2025. This falls additional to 16.4 instances by 2027. In flip, this means expectations of sturdy earnings progress and improved profitability over the subsequent a number of years. This trajectory brings AstraZeneca’s valuation nearer to sector friends, after a interval of elevated multiples.

The dividend yield stands at 2.36% for 2024. That’s barely beneath the sector common however supported by constant annual dividend will increase and a payout ratio of 53%. This seems is sustainable given AstraZeneca’s sturdy free money move and earnings outlook. Free money move yield is projected to rise from 4.36% in 2024 to six.61% by 2027, additional supporting the dividend and potential share buybacks. Total, AstraZeneca’s valuation metrics counsel a well-supported, rising earnings stream and bettering worth proposition.

Extra to think about

AstraZeneca’s funding case balances near-term regulatory dangers towards long-term progress ambitions. It lately introduced a possible $8m in fines over import duties in China. This provides to present challenges in a essential market, together with prior scandals and commerce tensions with the US. Whereas the monetary affect is modest relative to AstraZeneca’s $13.59bn Q1 2025 income, it underscores geopolitical dangers in a area contributing 20% of gross sales.

Lengthy-term, the corporate targets $80bn income by 2030, pushed by 20 new drug launches, together with Enhertu and Imfinzi, and enlargement in oncology, biopharmaceuticals, and uncommon illnesses.

Its operational resilience additional bolsters the funding case. It has a worldwide manufacturing footprint, together with 11 US websites, and R&D investments like the brand new Beijing AI-driven research centre.

Briefly, whereas issues haven’t been transferring in the proper path for AstraZeneca in current weeks, I’m assured on this enterprise’s long-term power. The present blip could even be a chance for me to purchase extra. I’m definitely contemplating this.