Tuesday's IBD 50 Stocks To Watch pick — pharmaceutical leader AstraZeneca — is one of the top stocks to watch in the ongoing stock market correction. AZN stock is trading nearly 2% higher midday, just above its latest buy point, with a relative strength line approaching new highs.
Stocks To Watch: AstraZeneca
AstraZeneca engages in the research, development and manufacture of pharmaceutical products.
In the company's most recent quarter, reported on Nov. 10, AstraZeneca's strong growth in cancer and diabetes drugs led to double-digit sales growth and a strong earnings beat.
Lee Brown, global sector lead for health care at Third Bridge, said the strong report "was driven by success across its franchises." Cancer drugs Calquence and Imfinzi put up strong performances, growing a respective 60% and 19% on strict, as-reported bases. Meanwhile, sales of diabetes treatment Farxiga rocketed 38%.
Overall, adjusted AstraZeneca earnings grew 56% year over year to 84 cents per share. Total revenue rose 11% to $10.98 billion. Part of the strong growth stems from the acquisition of Alexion Pharmaceuticals, maker of rare-disease drug Soliris. Though Soliris sales fell 13% during the quarter, it still added $901 million to the top line.
Cancer drug Calquence brought in $566 million. Sales of the company's biggest moneymaker, a cancer drug called Tagrisso, grew 12% to nearly $3.8 billion.
AstraZeneca's IBD Stock Ratings
This stock to watch shows a solid 93 out of 99 Earnings-Per-Share Rating and an SMR Rating of "A," according to IBD Stock Checkup.
Over the last three quarters, AstraZeneca's EPS growth averaged 54%, according to IBD MarketSmith. Looking forward, earnings are expected to jump 28% in 2022 and another 11% in 2023. It booked a solid 23% pretax profit margin in 2021, as well as a great 26% return on equity.
Boasting a good 94 Composite Rating due to strong fundamental and technical metrics, AstraZeneca is the top-ranked stock in the Medical-Diversified industry group. Among the other medical leaders in this group, Neurocrine Biosciences is trying to find support around its 50-day line. A strong rebound from here would offer an alternate buying opportunity for the IBD Leaderboard stock.
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AZN Stock Retakes Latest Buy Point
AZN stock broke out in early December, moving past a 68.49 buy point in a double bottom, according to IBD MarketSmith chart analysis.
But shares gave up that entry after an FDA approval delay on a drug it partnered with Dow component Merck. AZN stock is back in buy range past the double-bottom entry, climbing nearly 2% Tuesday midday. The 5% buy range goes up to 71.91, but keep in mind the market correction should keep almost everyone on the sidelines.
Meanwhile, another entry at 70.94 is also in play, which is the result of a handle on the double-bottom pattern.
Bullishly, the relative strength line is just shy of new highs, as shares hold up well during the ongoing stock market correction. A strong RS line in a weak market confirms AstraZeneca as a market leader.
The RS line measures a stock's price performance vs. the S&P 500. Given the drug leader's fundamental and technical strength, AstraZeneca is one of the top stocks to watch in the current market.
Other IBD 50 Stocks To Watch
These are three recent IBD 50 Stocks To Watch picks.
| Company Name | Symbol | Correct Buy Point | Type Of Base |
|---|---|---|---|
| Charles Schwab | 81.18 | Cup with handle | |
| Deere | 448.50 | Flat base | |
| AGCO | 137.10 | Cup with handle |
Source: IBD Data As Of Jan. 3, 2023
Follow Scott Lehtonen on Twitter at @IBD_SLehtonen for more on top stocks to buy and watch and the stock market.
