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Wondering if AstraZeneca at £137.48 is offering fair value or if the price is running ahead of itself? This article walks through what the current valuation signals might mean for you.
The stock is up 3.1% over the past week, while the past month shows a decline of 9.7%, with returns of 1.1% year to date and 37.4% over the last year, 20.9% over three years and 92.6% over five years.
Recent headlines around AstraZeneca have focused on its role as a major global pharmaceuticals player, with ongoing attention on its pipeline and broader sector sentiment. These themes often shape how investors think about future cash flows and risk, which can feed directly into valuation.
AstraZeneca currently has a valuation score of 3 out of 6, which reflects how it stacks up across several standard checks. The next sections will break down those methods before turning to a more complete way of thinking about value at the end of the article.
Approach 1: AstraZeneca Discounted Cash Flow (DCF) Analysis
A Discounted Cash Flow, or DCF, model estimates what a stock might be worth today by projecting future cash flows and discounting them back to a present value using a required return.
For AstraZeneca, the model used is a 2 Stage Free Cash Flow to Equity approach, based on cash flow projections. The latest twelve month free cash flow is about US$9.0b. Analyst estimates and subsequent extrapolations suggest projected free cash flow of about US$20.1b by 2030, with ten year forecasts stepping up gradually from 2026 through 2035.
When Simply Wall St discounts these projected cash flows back to today, the implied intrinsic value is US$237.27 per share. Against the current share price of £137.48, this implies the stock trades at a 42.1% discount to that DCF estimate, which points to a material gap between price and this model’s assessment of value.
This is only one valuation lens, but on these cash flow assumptions AstraZeneca screens as materially undervalued.
Result: UNDERVALUED
Our Discounted Cash Flow (DCF) analysis suggests AstraZeneca is undervalued by 42.1%. Track this in your watchlist or portfolio, or discover 7 more high quality undervalued stocks.
AZN Discounted Cash Flow as at May 2026
Approach 2: AstraZeneca Price vs Earnings
P/E is a useful yardstick for profitable companies because it links what you pay for each share directly to the earnings that support it. In general, higher growth expectations and lower perceived risk can justify a higher P/E, while slower growth or higher risk usually lines up with a lower, more conservative multiple.
Story Continues
AstraZeneca currently trades on a P/E of 27.79x. That sits above the Pharmaceuticals industry average of 22.26x and above the peer group average of 11.47x, so on simple comparisons the stock looks more expensive than many sector peers.
Simply Wall St’s Fair Ratio for AstraZeneca is 41.87x. This is a proprietary estimate of what P/E might be reasonable given factors such as earnings growth, profit margins, industry, market cap and risk profile. Because it pulls these variables together, the Fair Ratio aims to give a more tailored anchor than broad peer or industry averages, which may not share the same mix of growth and risk characteristics.
Comparing the current P/E of 27.79x with the Fair Ratio of 41.87x indicates that the stock is trading below this implied fair multiple.
Result: UNDERVALUED
LSE:AZN P/E Ratio as at May 2026
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Upgrade Your Decision Making: Choose your AstraZeneca Narrative
Earlier sections showed how tools like DCF and P/E can suggest AstraZeneca might be undervalued. Narratives go a step further by letting you set a story for the company, link that story to your own revenue, earnings and margin assumptions, and see the Fair Value that falls out of those numbers alongside the live share price.
On Simply Wall St’s Community page, Narratives are an easy way for you to say what you think is happening at AstraZeneca, connect that view to a forecast, and then see whether your Fair Value sits closer to the bullish end of analyst work at about £200.20 or the more cautious end around £124.85. The platform updates those figures automatically as new news or earnings arrive, so you can quickly judge whether the current price of £137.48 looks high or low against the story you believe in.
For AstraZeneca however, we will make it really easy for you with previews of two leading AstraZeneca Narratives:
Fair value in this bullish narrative: £163.06
Implied undervaluation versus the last close of £137.48: 15.7%
Revenue growth used in this narrative: 6.9% a year
Emphasis on a broad late stage pipeline across oncology, rare diseases and cardiovascular or metabolic therapies, with company estimates of more than US$10b in potential peak risk adjusted revenue from new medicines.
Revenue growth, margin expansion and cash flow are tied to emerging market exposure, volume driven therapies for chronic and age related conditions, and investment in technologies such as ADCs, bispecifics, mRNA and AI supported R&D.
Analysts anchor their £163.06 price target on assumptions about earnings of US$16.2b by 2029, higher profit margins of 22.6% and a future P/E of 26.1x, while also flagging risks from pricing pressure, patent expiries and high R&D spend.
Fair value in this bearish narrative: £124.85
Implied overvaluation versus the last close of £137.48: 10.1%
Revenue growth used in this narrative: 4.5% a year
Focus on tighter drug pricing, patent expiries on key blockbusters and regulatory scrutiny that could cap revenue growth and put pressure on profit margins over time.
Higher execution risk is highlighted around heavy R&D, global expansion and geopolitical exposure, with concerns that setbacks or delays could weigh on earnings and free cash flow.
The £124.85 fair value is tied to lower assumed earnings of US$12.4b by 2029, a more modest profit margin of 18.5% and a future P/E of 25.4x, reflecting analysts who see current expectations as too optimistic.
If you want to go beyond previews and see the full range of community views, including how fair value, risks and growth assumptions change as new data arrives, it is worth spending time with the narratives and the tools that sit behind them, starting with See what the community is saying about AstraZeneca.
Do you think there’s more to the story for AstraZeneca? Head over to our Community to see what others are saying!
LSE:AZN 1-Year Stock Price Chart
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.
Companies discussed in this article include AZN.L.
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