ASTRAZENECA PLC (AZN): what the price requires
At today's price, ASTRAZENECA PLC (AZN) is priced for +21.0% growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-13 · Source: https://boothcheck.com/report/AZN
Headline
| Field | Value |
|---|---|
| Ticker | AZN |
| Company | ASTRAZENECA PLC |
| Current price | $169.93/sh |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin needed | 8.3% |
| Operating margin today | 18.7% |
| Margin compression implied | -10.4pp |
| Implied growth | 21.0% |
| Multiple paid | 31x operating income |
The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.
Solve inputs: computed at a 8.1% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~8.7pp.
Reconcile: at the x-ray's 9.3% required return this reads ~6.3 years; the models below use their own rates.
How unusual the bet is: within-range
| Reference | Value |
|---|---|
| vs own history | -0.21σ |
| cohort percentile (of 112 peers) | 79 |
| sustained it ~5 years at this level | 39% |
| implied end-window share | 0% |
Valuation X-Ray
The price is justified by relative-multiple and growth-DCF; asset-based/earnings-power land below the price.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 2.38x | 5 | expensive |
| Earnings | 2.53x | 4 | expensive |
| Relative | 1.13x | 5 | expensive |
| Growth | 0.82x | 3 | justifies |
Families that justify the price: Relative, Growth Families that call it expensive: Asset, Earnings
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.6%); the inversion above states its own rate.
Per-Model Detail (n=17)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $206.17 | 0.82x | yes | FCF base $12.8B, growth 12% (input: historical growth), terminal g 4.0%, WACC 8.6%, 6yr projection |
| DCF Exit Multiple | Growth | $209.45 | 0.81x | yes | Exit EV/EBITDA: 19.3x / 21.3x / 23.3x (bear / base = today's held flat / bull), 6yr |
| Relative Valuation | Relative | $150.37 | 1.13x | yes | P/E 24x (sector median), scenarios: 19.9x / 24.0x / 28.1x (bear / base = sector held flat / bull), EV/EBITDA 16x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $71.37 | 2.38x | yes | BV/sh $31.43, ROE (TTM) 21.0%, ke 9.3% |
| Two-Stage Excess Return | Asset | $106.67 | 1.59x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $157.29 | 1.08x | yes | Rev $58.7B, growth 12% (input: historical growth; tapered), Terminal P/S: 3.7x / 4.5x / 5.2x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | $79.20 | 2.15x | yes | EPS $6.60, growth 2% (input: historical EPS growth), PEG=12.87 (Overvalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $26.55 | 6.40x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $7.35B × (1−17%) / WACC 8.6% → EPV (no growth) |
| Residual Income | Asset | $101.68 | 1.67x | yes | BV $31.43 + 5yr PV of (ROE (TTM) 21.0% − Kₑ 9.3%) × BV; BV grows 8.8%/yr |
| Graham Number | Asset | $68.32 | 2.49x | yes | √(22.5 × EPS $6.60 × BVPS $31.43) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $123.14 | 1.38x | yes | EBITDA $13.74B × sector EV/EBITDA 16.0x |
| FCF Yield | Earnings | $63.33 | 2.68x | yes | FCF $11765.0M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | — | — | no | — |
| Ben Graham Formula | Earnings | $212.96 | 0.80x | yes | EPS $6.60 × (8.5 + 2×15.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $53.05 | 3.20x | yes | BV $31.43 × (ROIC 14.6% / WACC 8.6%) |
| P/Sales Sector | Relative | $151.58 | 1.12x | yes | Revenue $58.74B × sector P/S 4.0x |
| PEG Fair Value | Relative | $247.50 | 0.69x | yes | EPS $6.60 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x |
| Earnings Yield | Earnings | $71.35 | 2.38x | yes | EPS $6.60 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net debt | $23.4b |
| Net debt / NOPAT (after-tax) | 3.07x |
| Net debt / operating income (pre-tax) | 2.53x |
| Interest coverage | 5.7x |
| Share count CAGR (dilution) | 2.3% |
| Burning cash | no |
Bullet Takeaways
At $174.90 the market is paying about 32x company-wide operating income, which implies roughly 22% operating growth a year for five years. That is a demanding bar, but it is what a high-growth oncology franchise with a $80 billion 2030 revenue target invites.
The fundamentals are running well below that implied rate today, yet the trajectory is real. Q1 2026 total revenue grew 13% to $15.3 billion (8% at constant currency), with oncology up 16% at constant currency to $6.8 billion and 14 regulatory approvals in the quarter.
The valuation methods split: relative-multiple and growth frames justify the price near $150 to $214, while the asset and earnings-power frames sit lower. The gap between a 22% implied rate and high-single-digit reported growth is the tension the price embeds.
Bull Case
The market is pricing AstraZeneca as a durable high-growth compounder, paying about 32x operating income for an implied 22% growth rate, and the question is whether the fundamentals back that ambition. They are pointed the right way. Q1 2026 total revenue grew 13% to $15.3 billion, 8% at constant currency, with reported EPS up to $1.99 and core operating profit up 12%. The 20-F shows product sales rising 16% at constant exchange rates to roughly $50.9 billion across well-balanced focus therapy areas and geographies, the breadth that separates a portfolio company from a single-blockbuster story.
Oncology is the engine that justifies the premium framing. Oncology sales rose 16% at constant currency to $6.8 billion in the quarter, and the pipeline keeps converting: positive Phase III data for tozorakimab in COPD and efzimfotase alfa in hypophosphatasia, 14 regulatory approvals in major markets, and multiple new submissions in a single quarter. That is the cadence of a company turning research into approved, revenue-generating products faster than most peers, with rare disease (up to $2.4 billion) adding a second high-margin growth pillar.
The contrast with the static frames is where the bull case sharpens. The conservative methods, earnings power value near $26 and the simple excess-return mark near $71, read trailing normalized earnings and miss the forward pipeline entirely. The growth and relative frames that incorporate the trajectory land near $150 to $214: a perpetual-growth DCF near $205, a DCF exit-multiple near $214, and a relative P/E mark near $150. Management reconfirmed 2026 guidance for mid-to-high single-digit revenue growth and low-double-digit core EPS growth, and reiterated a $80 billion revenue target for 2030. Net debt is modest at about 0.66x operating income with a trailing ROE near 21%. For an investor who believes the oncology and rare-disease pipeline sustains the growth, the price is paying for a trajectory the fundamentals are actively delivering rather than a hope.
Bear Case
The external variable with the most leverage on AstraZeneca is policy and regulation, and it is unusually live right now. Pharmaceutical pricing is under pressure from US drug-pricing reform, European cost-containment, and the constant threat of tariffs on imported medicines, all of which bear directly on the margins that underwrite a 22% implied growth rate. AstraZeneca completed a direct listing of its ordinary shares on the NYSE in February 2026, a move tied to harmonizing its listing structure and deepening US investor access, which also raises its profile in exactly the market where drug-pricing politics are most volatile. The price assumes the pricing environment stays benign enough to protect the growth, and that is a bet on politics the company cannot control.
The valuation already demands a lot before any policy headwind. At $174.90 (June 27, 2026) the market pays about 32x operating income for roughly 22% annual operating growth over five years, while reported revenue grew 8% at constant currency and core EPS guidance is low double digits. That gap between an implied 22% and a delivered high-single-to-low-double-digit rate is the stretch: the price needs the pipeline to accelerate growth well beyond the current run rate. The conservative frames price that skepticism. Earnings power value lands near $26, the FCF-yield mark near $63, the Graham number near $68, and the simple excess-return mark near $71, all far below the quote, because normalized trailing economics do not support the price without the forward ramp.
The specific dependencies are patent cliffs and pipeline risk. A diversified pharma still faces loss of exclusivity on major products over the coming years, and the 22% implied growth requires new launches to more than replace the revenue that goes generic, on schedule and at price. Phase III readouts can fail, approvals can be delayed, and label or reimbursement restrictions can blunt commercial uptake. The currency tailwind that lifted reported growth to 13% from 8% at constant currency can also reverse. The bet the price makes is that AstraZeneca out-innovates its own patent cliffs while a hostile pricing environment leaves its margins intact. The conservative valuation frames, clustered well below the price, are the reminder of how much of that favorable future is already paid for.
Valuation
Inverting the $174.90 price gives the anchor. At that level the market pays about 32x company-wide operating income, which under an 8.7% cost of capital implies operating growth of roughly 22% a year for five years. Each one-point change in the cost of capital moves the implied growth by about 8.7 points, so the read is rate-sensitive. The priced-in assumption is characterized as within range, justified by the relative-multiple and growth frames, while the asset and earnings-power frames say expensive.
The model X-ray shows the split. The growth and relative frames reach or approach the price: a perpetual-growth DCF near $205, a DCF exit-multiple near $214, a discounted future market cap near $162, a relative P/E mark near $150 on a 24x sector median, and the Ben Graham formula near $213. The asset and earnings frames sit lower: earnings power value near $26, simple excess return near $71, the Graham number near $68, the FCF-yield mark near $63, and ROIC-justified book near $53. The two-stage excess-return and residual-income marks near $102 to $107 sit in between, reflecting the high near-term ROE.
The spread is the information. The price is not a verdict on whether AstraZeneca is a good business, the oncology and rare-disease growth say it is strong. It is a measure of how much pipeline-driven acceleration the market has booked: a step-up toward 22% operating growth from a high-single-digit base, on a path that depends on new launches outrunning patent expiries in a tightening pricing environment.
Catalysts
The near-term driver is the pipeline and approval cadence. Q1 2026 brought positive Phase III data for tozorakimab in COPD and efzimfotase alfa in hypophosphatasia, 14 regulatory approvals in major markets, and multiple new submissions. Each major readout, approval, and launch is a direct input to whether the growth trajectory the price assumes materializes.
The structural catalyst is the oncology and rare-disease franchise. Oncology grew 16% at constant currency to $6.8 billion and rare disease added $2.4 billion in the quarter. Management reconfirmed 2026 guidance for mid-to-high single-digit revenue growth and low-double-digit core EPS growth, and reiterated a $80 billion revenue target for 2030. Progress against that long-term target is the multi-year driver.
The key risks to watch are external: US and European drug-pricing policy, potential pharmaceutical tariffs, and the company's heightened US profile after its February 2026 NYSE direct listing. Watch quarterly revenue and core EPS against guidance, oncology growth, Phase III readouts and approvals, patent-expiry timing on major products, and currency effects on reported versus constant-currency growth.
Sources: AstraZeneca Q1 2026 results announcement and StockTitan (Q1 2026 total revenue $15.3B up 13% / 8% CER, oncology $6.8B up 16% CER, rare disease $2.4B, reported EPS $1.99, core EPS $2.58, 14 approvals), Investing.com and The Globe and Mail (reconfirmed 2026 guidance, $80B 2030 revenue target, tozorakimab and efzimfotase Phase III data), AstraZeneca press releases and Panabee (NYSE direct listing effective February 2, 2026).
Peer Cohorts (Per Segment, With Filing Citations)
Core business (reported)
- NVS (Novartis AG)
- (no filing in the citation store)
- GSK (GSK plc)
- (no filing in the citation store)
- BMY (Bristol-Myers Squibb Company)
- (no filing in the citation store)
- MRK (Merck & Co., Inc.)
- (no filing in the citation store)
- PFE (Pfizer Inc.)
- (no filing in the citation store)
- ABBV (AbbVie Inc.)
- (no filing in the citation store)
- LLY (ELI LILLY & Co)
- (no filing in the citation store)
- JNJ (Johnson & Johnson)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.