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FTSE 100 pharmaceutical titan AstraZeneca (LSE: AZN) surged past its previous 3 September 2024 high on 11 November.
This came after the release of its Q3 2025 results and made it the largest UK-listed stock by market value.
After such a rise, many investors have been left asking whether there can be any room for further gains. So, is there?
Were the results that good?
Q3 revenue jumped 12% year on year to $15.19bn (£11.59bn) – ahead of analysts’ expectations of $14.79bn. Core earnings per share (EPS) were up 14% to $2.38 – also outstripping forecasts (for $2.29).
These numbers meant that over the first nine months of this year, revenue has surged 11% to $43.24bn. Core EPS has soared 15% to $7.04.
AstraZeneca also highlighted 16 positive Phase III readouts and 31 regulatory approvals, underscoring its product pipeline’s strength in depth. Phase III readouts, incidentally, are the final testing stage for a new drug before it goes for final regulatory approval.
Any other factors?
These forecast-busting numbers laid the groundwork for the share price surge, I think. But three other elements conspired to drive the stock into record-breaking territory.
The first was an announcement to lower prescription medicine prices in the US. AstraZeneca’s chief financial officer said the firm is confident it can handle the financial hit from the deal with Washington.
The second was an agreement for the US Department of Commerce to delay its tariff assessment on the firm for three years. This will enable AstraZeneca to ensure that all its medicines sold in the US are made there.
And the third came from the 10 November Phase III trial results for its Baxdrostat drug. These showed significant reductions in treatment-resistant high blood pressure. Around 1.4bn people are so afflicted, and in the US alone, around 50% do not have their blood pressure under control.
What’s it mean for earnings growth?
Ultimately, it is growth in earnings (or ‘profits’) that drives any stock price higher over the long run.
A risk for AstraZeneca is a failure in any of its multiple drug development pipeline. These programmes are extremely expensive in terms of time and money, and a lack of success might hit the bottom line.
That said, the firm reiterated in the Q3 results document that 2025’s total revenue will increase by a high single-digit percentage. At the same time, it said that core EPS would increase by a low double-digit percentage.
It also reiterated its target of delivering $80bn of revenue by 2030, against $54.073bn in 2024.
So, is it still worth me buying the stock?
The discounted cash flow valuation model uses cash flow forecasts for a firm to pinpoint where its shares should trade. These in turn factor in earnings growth forecasts for the business.
In AstraZeneca’s case, analysts forecast that its earnings will grow by a very robust 14.6% a year to end-2027.
And the DCF shows the shares are 36% undervalued at their current £134.93 price. Therefore, their ‘fair value’ is £210.83.
As there is still a huge amount of value left in the stock I will be buying more soon.
However, I also have my eye on other highly undervalued growth stocks.
