Tempted by the AstraZeneca share price? Here’s why it could explode in 2023

Over half a decade ago, the AstraZeneca (LSE: AZN) share price on top of everything FTSE 100 one bar stock. A rapid 119% growth over five years means the biotech company’s shares are trading at £111.77 as I write – a huge gain from £50.95 in January 2018.

Even after the explosive growth, I believe the Anglo-Swedish pharmaceutical giant still has a lot of upside potential now. As a shareholder, I expect this potential to be a positive move for the share price.

Here’s my take on the business and why I’m buying more AstraZeneca shares in 2023.

Company specific reasons

First, let’s look at AstraZeneca’s pipeline. The company has 179 projects on the go. This includes 13 new molecular entities in the final pipeline and two new approvals. In my view, the business has one of the most promising portfolios of any pharmaceutical company in the world.

Although the Covid vaccine made the company a household name, its power runs deeper. AstraZeneca’s medicines cover a wide range of health concerns from oncology to cardiovascular and respiratory diseases.

The company is also growing. It recently took advantage of the accident Cincor Pharmacy stock price for blood pressure biotech outfit snap. The deal will be worth $1.8bn if Cincor can secure regulatory approval baxdrostat products for patients with treatment-resistant hypertension.

The drug can be combined with AstraZeneca charge drugs to treat heart disease, which can contribute significantly to the company’s revenue. The merger agreement is expected to be completed in the first quarter of 2023, provided all conditions are met.

Beyond its strong pipeline and ambitious expansion plans, another reason I like AstraZeneca is the geographic diversification it offers. With a truly global source of revenue, the company isn’t very visible in the global areas I’m interested in.

Macroeconomic trends

There are also macroeconomic factors that make the pharmaceutical industry an interesting play for me right now. No company is immune to the onslaught of high inflation, but pharmaceutical companies have high discretionary payout rates and considerable pricing power.

What’s more, the industry is relatively non-cyclical. Whether the economy is performing well or declining, the demand for medicines remains constant. In the event of a recession, I would like to increase my exposure to these sectors to hedge against potential falls in the value of other investments.

Risk

Admittedly, there are risks that could derail the stock’s positive trajectory. The business has a high price-to-earnings (P/E) ratio of over 105, indicating that it is expensive using traditional valuation metrics.

There are also concerns that some drug candidates may fail to secure regulatory approval. This could weigh on expected earnings growth and harm AstraZeneca’s share price in the process.

It’s a difficult balancing act. If there are not enough new agreements to replace patent expirations in the coming years, promising business prospects may change.

Why should I buy more shares of AstraZeneca

Despite concerns about the high P/E ratio, I believe the main pipeline warrants a premium valuation. AstraZeneca is a leader in medical advancements. I am well positioned to continue the outperformance amongst the FTSE 100 stocks.

A promising combination of micro and macro factors makes me bullish on AstraZeneca. I will buy more this week.