Image source: Getty Images <\/p>\n
The pharmaceuticals sector used to be a happy hunting ground for investors looking for\u00a0income stocks\u00a0with share price growth potential too.\u00a0AstraZeneca<\/strong>\u00a0(LSE: AZN) and\u00a0GSK<\/strong>\u00a0(LSE: GSK) are two proud\u00a0FTSE 100<\/strong> names, but lately life has been somewhat challenging.<\/p>\n After a long run under transformative CEO Pascal Soriot, who turned AstraZeneca into the UK\u2019s biggest company, a slowdown was inevitable as the valuation looked stretched. In contrast, GSK, under CEO Emma Walmsley, has struggled to keep investors onside as its drugs pipeline thinned and its dividend eroded.<\/p>\n Both stocks took a hit from threatened US tariffs on imported pharmaceuticals. Yet the last week has been fun, with AstraZeneca shares jumping 15% and GSK (which I hold) up 10%. And about time too.<\/p>\n AstraZeneca\u2019s underlying business remains strong. On 29 July, it reported a 26% rise in first-half pre-tax profits to $6.52bn. It delivered 12 positive Phase III readouts and 19 major approvals.<\/p>\n There are other issues at play and last Monday (29 September) one at least was cleared up, as Soriot announced plans to list directly on the New<\/strong> York<\/strong> Stock<\/strong> Exchange<\/strong>. AstraZeneca already trades there via US depositary receipts, but the new listing will deepen its access to capital markets. Happily, it will retain its UK base and\u00a0FTSE 100<\/strong>\u00a0status.<\/p>\n The company also plans to invest $50bn in expanding its US operations. That\u2019s a direct response to the tariff threat and shows how seriously it\u2019s taking its American future.<\/p>\n Despite the recent 15% jump, the share price is up a modest 5.7% over 12 months. It still looks a little pricey, with a\u00a0price-to-earnings ratio\u00a0of 20.4. However, that also reflects investor confidence in its long-term growth story. The trailing yield has fallen to 1.95%.<\/p>\n Despite last week\u2019s jump, GSK\u2019s shares are only up 11.5% over 12 months. Growth has been in short supply for years. The shares perked up after Walmsley\u2019s departure was announced on 29 September, as investors hoped for a change of direction.<\/p>\n But Q2 results, published on 29 July, weren\u2019t exactly disastrous, with operating profit up 33% to \u00a32.02bn. Cash generation rose 47% to \u00a32.43bn.<\/p>\n Legal wrangles over Zantac and vaccine setbacks have held GSK back, but management expects five major US approvals this year and 14 more product launches between 2025 and 2031. The group is also adapting to tariffs by expanding US manufacturing.<\/p>\n GSK shares look better value, with a P\/E of 10.9. Although that also signals lower hopes for the future. The dividend yield of 3.75% is decent, though still a far cry from the 5% to 6% investors once took for granted.<\/p>\n Yet I think GSK\u2019s low valuation makes it worth considering today. My personal holding is finally stirring, and I suspect the real rewards will come over the longer term for patient investors who\u00a0take the long-term approach.<\/p>\n There are always risks. Drug approvals are never risk-free. Class action lawsuits can spring up out of the blue and prove costly. Tariff threats add another layer of uncertainty.<\/p>\n AstraZeneca has the stronger record and the bolder strategy, but both firms show that big pharma still has life in it. This sector might be volatile in the short run, but over time, should deliver both income and growth.<\/p>\n The post Up 15% and 10% in a week! Are these 2 UK growth and income stocks about to go gangbusters?<\/a> appeared first on The Motley Fool UK<\/a>.<\/p>\n More reading<\/strong><\/p>\n Harvey Jones has positions in GSK. The Motley Fool UK has recommended AstraZeneca Plc and GSK. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.<\/a><\/p>\n Motley Fool UK 2025<\/p>\n","protected":false},"excerpt":{"rendered":"Image source: Getty Images The pharmaceuticals sector used to be a happy hunting ground for investors looking for\u00a0income…\n","protected":false},"author":2,"featured_media":475839,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3,4],"tags":[8295,748,146570,393,4884,157971,1144,157970,712,16,15,1764],"class_list":{"0":"post-475838","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-uk","8":"category-united-kingdom","9":"tag-astrazeneca","10":"tag-britain","11":"tag-emma-walmsley","12":"tag-england","13":"tag-great-britain","14":"tag-income-stocks","15":"tag-northern-ireland","16":"tag-pascal-soriot","17":"tag-scotland","18":"tag-uk","19":"tag-united-kingdom","20":"tag-wales"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@uk\/115321547469569644","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/475838","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=475838"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/475838\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/475839"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=475838"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=475838"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=475838"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}