AstraZeneca (NYSE:AZN) reports third-quarter results next week, and it has already stuck to one promise this year. Guidance calls for revenue growth in the mid-to-high single digits and core earnings per share growth in the low double digits. Management reconfirmed both when it reported the second quarter.
But the pieces inside that promise pull in different directions. Cancer medicines are growing at a double-digit pace, while the company’s older heart and kidney drugs are shrinking. The question is whether the first can keep outrunning the second, and the stock’s price suggests investors aren’t sure.
AstraZeneca sells cancer treatments, rare-disease drugs, and a broader group of medicines for heart, kidney, metabolic and respiratory care. The facts lean toward cancer winning, and toward a share price that already assumes more doubt than the results support. The company is one of the 10 No-Brainer Stocks to Buy Now.
Cancer Sales Are Doing the Heavy Lifting
Oncology brought in $14.1 billion in the first half of 2026, up 15% at constant exchange rates. Rare disease also grew in double digits. In the second quarter, revenue rose 6% while core earnings per share rose 21% to $2.63, so profit grew much faster than sales. Management says it remains on track for $80 billion in revenue in 2030, which puts the pace of the next few years at the center of the story.
The business behind those numbers is profitable, with an operating margin of about 22.4% over the past 12 months. Growth has cooled from its earlier pace, though. Sales grew about 16.3% a year over the past five years, but about 9.8% a year over the past three. If you’re interested in healthcare investing, we recently compiled a report on 10 Best Healthcare Stocks to Buy According to Hedge Funds.
The Older Medicines Are Shrinking
Not every part of the company shares that momentum. BioPharmaceuticals, the group that holds the heart, kidney, metabolic and respiratory medicines, brought in $11.2 billion in the first half, down 5%. That group makes up 36% of revenue, so its direction matters as much as the cancer growth does.
Investors have shown how nervous they get about what management might do next. When reports surfaced that AstraZeneca had held early merger talks with Bristol Myers Squibb, its shares fell sharply. A senior source later told Reuters that no talks were underway and that no deal had ever been close.
The denial settled the immediate scare, but not the worry behind it. If older medicines keep shrinking, pressure to buy growth could return, and the stock’s reaction showed how little shareholders want a megadeal. That is a bigger risk to the share price than to sales, since cancer sales were still growing at double digits in the first half. Investors tracking which stocks are losing favor can see our ranking of 10 Stocks Investors Are Running Away From.
What the Price Is Betting On
On estimated 2026 earnings, AstraZeneca trades at 16.80 times, against a sector median of 19.53. That puts it about 14% below the typical health care stock, even though consensus forecasts call for 2027 earnings per share to grow 12.87%.
Those multiples rest on adjusted earnings. Reported earnings were lower, at $1.61 per share in the second quarter against $2.63 on the core measure, which leaves out amortization, impairments, legal settlements and restructuring costs. If you own the stock, you’re paying less than the sector pays for earnings growth in the low double digits, but you’re also trusting the adjusted number. For investors looking for undervalued growth, our list of 10 Undervalued Growth Stocks to Buy Now is worth a look.
So the discount looks wider than the results justify, as long as cancer sales keep growing. The thing to watch is next week’s report. It will show whether BioPharmaceuticals shrinks more slowly than the 5% it did in the first half, and whether management keeps its guidance for low double-digit core earnings growth.
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This article is originally published at Insider Monkey.
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