Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

AstraZeneca plc (ADR) (AZN), GlaxoSmithKline plc (ADR) (GSK): A Big Pharma Company With a Juicy Dividend Yield and Low Valuation

Page 1 of 2

Recently, AstraZeneca plc (ADR) (NYSE:AZN) announced that it has agreed to acquire Pearl Therapeutics, the respiratory drug manufacturer, in a transaction worth around $1.15 billion. Since the beginning of the year, AstraZeneca plc (ADR) (NYSE:AZN) has gained more than 8%, lagging the S&P 500’s return of more than 14.7%. Is AstraZeneca plc (ADR) (NYSE:AZN) a good buy after its recent acquisition? Let’s find out.

AstraZeneca plc (ADR) (NYSE:AZN)

Synergy between AstraZeneca plc (ADR) (NYSE:AZN) and Pearl Therapeutics

AstraZeneca plc (ADR) (NYSE:AZN) is considered a big player in the cardiovascular field, generating more than $9.53 billion, or 34% of total revenue in 2012. It also derived a significant portion of its top line from respiratory & inflammation products to the tune of $4.4 billion, accounting for 14.8% of total sales in 2012. Its iconic brand in Respiratory & inflammation segment is Symbicort, producing nearly $3.2 billion in sales.

The acquisition of the privately-held Pearl Therapeutics would give AstraZeneca plc (ADR) (NYSE:AZN) exposure to the treatment of chronic obstructive pulmonary disease (COPD), which is in late-stage development. AstraZeneca CEO Pascal Soriot felt excited about this acquisition. He said: “Chronic obstructive pulmonary disease continues to increase worldwide and there is a growing need for the next generation of inhaled combination products. Pearl’s novel formulation technology, together with its development products and specialist expertise are a great complement to AstraZeneca’s long-established capabilities in respiratory disease, one of our core therapy areas.”

He strongly believes that Pearl Therapeutics would give AstraZeneca various treatment options, strengthening the company’s respiratory portfolio. Interestingly, AstraZeneca only has to pay $560 million on completion, and the remaining $450 million would be paid if certain development milestones are achieved.

AstraZeneca expects a sharp fall in both sales and profit in 2013, but the long-term should be brighter with the ongoing business restructuring under the leadership of new CEO Pascal Soriot. He has decided to suspend share buybacks and dividend increases to reserve cash for acquisitions and in-house R&D, which would boost the company’s long-term prospects. The market values AstraZeneca at only 9.9 times its forward earnings.

The cheapest but paying the highest dividend yield

Compared to its peers GlaxoSmithKline plc (ADR) (NYSE:GSK) and Novartis AG (ADR) (NYSE:NVS), AstraZeneca is much cheaper. GlaxoSmithKline plc (ADR) (NYSE:GSK) is trading at around $52.80 per share with a total market cap of nearly $128 billion. The market values GlaxoSmithKline plc (ADR) (NYSE:GSK) at a higher valuation at 12.3 times its forward earnings. In the beginning of May, it announced that its product, BREO ELLIPTA, had received FDA approval to treat patients with chronic obstructive pulmonary disease.

Page 1 of 2

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!