It might be expected that in the middle of a pandemic, pharma stocks of all shapes and sizes will be in positive focus. To some extent this has been the case for the Astrazeneca share price, especially with hopes regarding a COVID-19 vaccine.
However, having hit £10 plus high in July, the Astrazeneca share price has clearly been in consolidation mode, as investors look for fresh fundamental drivers. Ironically, the potential driver of growth, COVID-19, appears to have been something which has recently undermined Astrazeneca shares.
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COVID-19 disruption for the Astrazeneca share price
The counter-intuitive reason for the negative impact on Astrazeneca shares from the pandemic, is that COVID-19 disruption in hospitals and clinics means that diagnoses that led to drug prescriptions are being reduced. This has shown up in the latest Q3 from Astrazeneca where key fundamental metrics have either been down, or less than expected.
For instance, product sales came in at 7% rather than 9% the previous quarter, revenues up 3% down from 11%. Indeed, oncology, respiratory and asthma treatment sales all dropped in Q3.
Astrazeneca shares vaccine hopes in limbo
All of this explains why the Astrazeneca share price remains some 15% off the highs of the year. This is even though the AZN share price has clearly been supported by its high profile COVID-19 initiative with Oxford University.
However, although the vaccine was due to be ready to combat the pandemic even as soon as the current second wave, it remains in limbo. Vaccines are literally on ice – waiting on clinical trials results and emergency approval. Ironically, the clinical trials were impacted by a lack of COVID-19 patients during the summer. So 30 million vaccines by the end of September has become 4 million by the end of the year.
Maintained guidance for Astrazeneca shares
It would be wrong to say that there are new drivers for Astrazeneca shares in the near term. For the Astrazeneca share price it is the new blockbusters who are the real catalysts of future growth, and in this respect recently approved prostate cancer treatment Lynparza and diabetes drug Forxiga.
Therefore despite the COVID-19 vaccine delay, and pandemic disruption, the Astrazeneca shares pipeline has allowed the company to maintain full year guidance. Total revenue expected to increase by a high single-digit to a low double-digit percentage and core earnings per share expected to increase by a mid- to high-teens percentage. Given the volatility in the environment for AZN shares, such guidance remains impressive.
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4. Choose your position size
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AZN share price: daily chart
Although the stock market cliche of “elephants don’t gallop” has some truth to it, for AZN shares we have seen strong momentum over much of 2020. This was particularly the case from March to July with the move from £6 to £10. It would appear that the story of October for the Astrazeneca share price was a double bear trap from below £8. This is something which could leave it well placed to retest the July peak towards the end of 2020, especially while the £8 level is held.
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