How Does AstraZeneca’s UK Investment Pause Impact Its 2025 Stock Valuation?

Trying to figure out whether to buy, sell, or simply hold AstraZeneca stock? You are not alone. With the company’s shares closing recently at $112.58, AstraZeneca is catching the attention of investors who want to know how news and numbers line up for the future. Over the last week, shares have slipped by -0.8%, adding to a recent 30-day drop of -5.9%. On the other hand, if you zoom out, the stock is up 5.9% year-to-date, nearly flat over one year, and up a strong 47.9% over five years. This history shows a stock with a real track record for long-term growth, even if it can experience some volatility in the short term.

Some of the recent noise stems from AstraZeneca’s decision to pause a planned $271 million investment in its UK research hub. Moves like this can shake investor confidence and spark worries that regulatory risks or shifting business priorities might weigh on the company. Meanwhile, global headlines about pharmaceutical tariffs and vaccine policy keep the healthcare sector in the spotlight, further fueling market volatility. Despite this, AstraZeneca’s valuation paints an interesting picture. The company scores a 4 out of 6 on our composite value score, indicating it is viewed as undervalued across most key checks.

Of course, headline numbers only go so far. There are several classic ways to determine whether AstraZeneca’s shares are truly undervalued, fairly priced, or even sitting on a hidden premium. We will walk through those valuation approaches next, and by the end, I will share a perspective on an even better way of understanding what the numbers really mean for investors.

AstraZeneca delivered -0.2% returns over the last year. See how this stacks up to the rest of the Pharmaceuticals industry.

Approach 1: AstraZeneca Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model is a classic method for valuing companies by projecting future free cash flows and discounting them back to today’s dollars. This approach estimates what AstraZeneca is worth based on what it should earn over time, providing a grounded view of its long-term value.

AstraZeneca’s latest reported Free Cash Flow is $8.72 billion. Analyst estimates forecast significant growth, with free cash flow projected to reach $18.72 billion by the end of 2029. These projections show steady increases each year. Much of the growth in the next five years is based on analyst estimates, while longer-term projections are extrapolated by financial modelers.

Using these data, the DCF calculation arrives at an intrinsic fair value of $224.00 per share. With AstraZeneca shares recently closing at $112.58, this suggests the stock is trading at a substantial 49.7% discount to its calculated intrinsic value.

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for AstraZeneca.

Our Discounted Cash Flow (DCF) analysis suggests AstraZeneca is undervalued by 49.7%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: AstraZeneca Price vs Earnings

For profitable companies like AstraZeneca, the Price-to-Earnings (PE) ratio is widely used because it compares what investors are willing to pay for each dollar of company profits. The PE ratio is especially useful when earnings are positive and relatively stable, as it reflects both current profitability and future growth prospects.

What counts as a “normal” or “fair” PE ratio depends not only on a company’s growth outlook but also on risk levels. Fast-growing or lower-risk companies often command a premium, while riskier or slower-growing firms usually trade at a discount. AstraZeneca currently trades at a PE ratio of 28.5x. For context, the peer average stands at 14.0x and the broader pharmaceutical industry has a typical PE of 24.8x, both lower than AstraZeneca’s valuation, signaling a market premium.

Rather than relying solely on peer and industry comparisons, Simply Wall St calculates a custom “Fair Ratio,” which, in this case, is 31.5x. This figure brings in company-specific factors like earnings growth, margins, risks, sector, and market cap, making it a more tailored benchmark. Compared to this Fair Ratio, AstraZeneca’s PE ratio is slightly below, suggesting the current price is quite reasonable given its attributes.

Result: ABOUT RIGHT

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your AstraZeneca Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative is your story behind the numbers, connecting your assumptions about AstraZeneca’s future revenue, earnings, and profit margins to a clear estimate of fair value. It is how investors add real context to the numbers they see.

On Simply Wall St’s Community page, millions of investors use Narratives to spell out what they believe is driving a company’s future, tie those beliefs to a financial forecast, and compare their own estimated fair value directly to the current price. This makes it much simpler to decide whether to buy, hold, or sell based on what you actually believe, not just what the market or consensus says.

Narratives are continuously updated as new company news, earnings, or regulatory changes emerge, so the fair value estimate always stays current. For example, some investors may be optimistic about AstraZeneca’s expanding drug pipeline and strong presence in emerging markets, leading them to assign a high fair value close to £180.93 per share. Others, focused on risks like patent expiries and regulatory hurdles, set their expectations far lower, around £108.24. Narratives empower you to invest with confidence, using your own perspective as the guide.

Do you think there's more to the story for AstraZeneca? Create your own Narrative to let the Community know!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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