How the Trump-AstraZeneca Drug Price Deal Impacts Its 2025 Share Value

Are you wondering whether now is the right moment to buy, hold, or sell AstraZeneca? You’re not alone. With pharma stocks often in the headlines and government policy always in play, there are plenty of voices offering quick takes. But recent action in AstraZeneca’s share price is hinting at bigger stories beneath the surface, especially for anyone thinking carefully about long-term value.

AstraZeneca has been catching attention with a steady climb. Its shares are up 1.0% in the last week and a notable 7.3% in the past month. Year-to-date, that return jumps to 20.2%, and looking back over five years, investors have seen the stock surge an impressive 74.4%. What’s driving this momentum? In just the last few days, headlines have highlighted an agreement between AstraZeneca and the White House to lower drug prices, signaling a shift in how the market views the company’s risk profile and potential for future growth. Moves like this can be a catalyst for sentiment, both for those excited by growth potential and those wary of disruption in pharma margins.

Of course, for every hot news story, there’s the underlying question of what the stock is truly worth. On a 6-point value score, AstraZeneca earns a 3, reflecting that it appears undervalued by half of the methods analysts use to assess fair price. In the following sections, we’ll break down those valuation approaches, revealing where AstraZeneca stands out, and by the end, introduce an even more powerful lens for understanding its real value in your portfolio.

AstraZeneca delivered 11.0% 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

A Discounted Cash Flow (DCF) model estimates what a company’s shares are worth by projecting its expected future cash flows and discounting them back to today’s dollars. This approach gives investors a sense of the business’s intrinsic value, putting aside market mood swings and headline risk.

For AstraZeneca, the DCF model projects significant growth in its Free Cash Flow (FCF), starting at $8.7 billion today and expected to reach over $19.4 billion by 2029, based on analyst forecasts and further extrapolations. Longer-term, the company could be producing upwards of $27.3 billion annually in Free Cash Flow by 2035. These numbers show strong, sustained growth in earnings power, using both analyst estimates for the next five years and more conservative projections beyond.

The DCF calculation arrives at an estimated intrinsic fair value of $240.37 per share. Compared to today’s share price, this suggests AstraZeneca is trading at a 46.8% discount to its intrinsic value. This strongly indicates that the stock is undervalued by this metric.

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 46.8%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: AstraZeneca Price vs Earnings

The Price-to-Earnings (PE) ratio is a popular and time-tested way to value profitable companies like AstraZeneca. It tells investors how much they are paying for each dollar of current earnings, making it easier to compare companies in similar industries with steady profitability.

However, a “normal” or “fair” PE ratio is not one-size-fits-all. Companies expected to grow faster or with lower risks tend to have higher PE ratios, while those facing more uncertainty or slower growth typically trade at lower multiples. Earnings quality and market sentiment also play an influential role.

AstraZeneca is currently trading at a PE ratio of 31.9x. Compared to the pharmaceuticals industry average of 24.8x and a peer average of 14.8x, it is noticeably higher. Looking deeper, Simply Wall St's proprietary Fair Ratio for AstraZeneca is 33.3x. This Fair Ratio stands out because, unlike a simple industry average or peer comparison, it factors in AstraZeneca’s expected earnings growth, profit margins, market cap, and specific industry risks. This approach provides a more accurate benchmark for what the company “should” be worth right now.

With AstraZeneca's actual PE ratio just below its Fair Ratio, the stock appears to be valued about right based on its earnings potential and risk profile.

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 there's an even better way to understand a stock's value, so let's introduce you to Narratives.

Narratives are a way to frame your investment thinking. They are your personal story about AstraZeneca, rooted in your assumptions about its future revenue, earnings, and margins. Instead of just looking at numbers on their own, Narratives connect what you believe about a company's prospects to an explicit financial forecast and resulting fair value. This gives more context to your decisions and makes it far easier to decide if and when to buy or sell.

On Simply Wall St, creating or exploring Narratives is simple and accessible, right from the Community page. It is the tool used by millions of investors to quickly see how different perspectives produce different valuations. Not only can you compare your view of fair value to the latest price, but Narratives automatically update as soon as new news, earnings, or data is released, keeping your viewpoint informed and relevant.

For example, some users expect AstraZeneca's strong drug pipeline and emerging market growth will drive $15.8 billion in earnings by 2028 and a fair value near £180, while others are more cautious, forecasting £10.8 billion and fair value about £108. Both perspectives coexist transparently for smarter, faster investing.

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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