Investing in Big FTSE 100 Pharma: AstraZeneca vs. GSK in 2024

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As we embark on 2024, the healthcare sector remains a fertile ground for investors, particularly within Big Pharma. Two British FTSE 100 giants, AstraZeneca (AZN) and GlaxoSmithKline (GSK) stand out as potential contenders for your portfolio. But which one deserves your hard-earned capital? Let’s delve into the data and insights to uncover the better investment prospect for the year ahead.

AstraZeneca: A Growth Engine with Diversified Power

AZN paints a picture of robust growth fueled by a diversified product portfolio and a strong R&D pipeline. The company boasts:

  • Double-digit earnings growth forecasts for 2024 and 2025, driven by established drugs like Farxiga and Lynparza exceeding $3 billion in sales each.
  • Promising clinical trials in immunotherapy and rare diseases, with the potential for significant future boosts.
  • Expansion into profitable sectors like rare diseases and potentially the obesity market, offering long-term diversification and growth potential.
  • Attractively priced shares relative to earnings forecasts and industry averages, suggesting a potentially undervalued gem.
  • Strong R&D focus in oncology, a high-margin area, further strengthening its market position and financial performance.

However, challenges remain, including the slowdown in pandemic vaccine sales and setbacks in lung cancer treatment trials. Despite these hurdles, AZN’s overall trajectory appears promising, making it a compelling choice for investors seeking growth and diversification in their portfolios.

GSK: A Phoenix Rising from the Ashes?

GSK presents a different story, one of potential revival and strategic transformation. The company has taken steps to address past criticisms of underperformance, including:

  • Shifting its strategy to balance commercial and R&D efforts, aiming for a more productive outcome.
  • Bringing in experienced leadership like Luke Miels, former chief commercial officer of Roche and AstraZeneca, to spearhead the turnaround.
  • Showcasing progress with new drugs like Arexvy, indicating a potential return to form.
  • Building a strong pipeline through strategic partnerships and licensing deals, focusing on early-stage drugs and research quality.
  • Positive investor sentiment reflected in rising share prices, suggesting confidence in the turnaround strategy.

While GSK’s future remains uncertain, the positive developments and strategic shift are encouraging. Investors seeking a potential turnaround play with high-growth potential in the long term may find GSK appealing.

AstraZeneca vs GSK: In Numbers

Short Interest0.18%0.14%
Market Cap£212B£64.8B
Dividend Yield2.19%3.55%
Sales Q/Q4.64%12.01%
Price to Earning (P/E)36.60%10.90%
Price to Sales (P/S)4.772.22
Price to Free Cash Flow (P/FCF)22.8318.21
Return of Equity (ROE)16.30%56.81%

AstraZeneca vs GSK: Valuation

According to the Simply Wall St website, both FTSE 100 Pharma giants are undervalued. Here is their valuation comparison table:

Current Price£107.72£15.49
Fair Valution£199.76£37.37
Valuation46.1% Undervalued58.5% Undervalued

The Verdict: A Tale of Two Titans

Choosing between AZN and GSK depends on your investment goals and risk tolerance.

  • For growth-oriented investors seeking diversification and established earnings power, AZN might be the better fit. Its strong pipeline, promising clinical trials, and attractive valuation offer a compelling package.
  • For those with a higher risk appetite and a belief in GSK’s turnaround potential, the company could be a rewarding long-term play. Its strategic shift, promising new drugs, and rising share prices suggest a potential phoenix rising from the ashes.

Ultimately, the decision rests on your individual investment strategy and risk tolerance. AZN and GSK offer unique opportunities, but conducting further research and consulting a financial advisor is crucial before making investment decisions.

Remember: This article is for informational purposes only and should not be considered financial advice. Always do your own research and due diligence before investing.

Disclaimer: As a long-term investor, I have been investing in GSK since 2020, and it has become one of my top positions in my pension portfolio.

Additional References:

I hope this information helps you make informed investment decisions in 2024!

  • Adam Grant

    Adam Grant is a highly qualified writer with a solid educational background in finance, holding a Bachelor's degree in Economics and a Master's degree in Business Administration (MBA). With his expertise in financial matters and a deep understanding of investment principles, Adam shares his insights to educate readers on the importance of financial literacy and smart investing strategies. Additionally, he has pursued courses in health and wellbeing, allowing him to offer a holistic perspective on achieving overall wellness in conjunction with financial stability.

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