It’s a good day for the AstraZeneca (LSE: AZN) share price, up 5% on 6 February as investors give the thumbs up to its full-year 2024 results. 

The UK’s largest company continues to demonstrate resilience and growth under CEO Pascal Soriot. Yet when looking to add a pharmaceutical stock to my portfolio last year, I chose underpowered FTSE 100 rival GSK. That may seem odd, given that it’s played second fiddle for years.

But I thought AstraZeneca was too expensive, while GSK looked better value. So what do I think today?

This stock has done the FTSE 100 proud

So far, it’s been a losing bet. AstraZeneca is up 7% over the last 12 months, GSK is down 15%.

Yesterday (5 February) GSK’s shares jumped 7.5% on positive results but AstraZeneca isn’t taking that lying down. This morning (6 February), it reported a 38% jump in pre-tax profits to $8.69bn at constant exchange rates (26% actual).

Soriot was happy, hailing “a very strong performance in 2024 with total revenue and core earnings per share (EPS) up 21% and 19%, respectively”. Sales of cancer, lung and immunology treatments were notably healthy.

He promised more to come as AstraZeneca embarks on “an unprecedented, catalyst-rich period for our company, an important step on our Ambition 2030 journey to deliver $80bn total revenue by the end of the decade”.

The all-important drugs pipeline remains robust. AstraZeneca completed nine positive first Phase III studies in 2024 and anticipates another seven this year.

Soriot can’t afford any slips. The shares now trade on a staggering trailing price-to-earnings ratio of 65. That’s way above the FTSE 100 average of just 15 times. GSK is at a lowly nine times,

To hit that Ambition 2030 target, Soriot must increase revenues from $54.1bn in 2024 to $80bn. By my calculations, that’s a compound increase of almost 7% a year. 

That looks eminently doable given 2024’s huge 21% increase, but AstraZeneca won’t continue rattling along at that speed. It forecasts sales growth will slow this year, to a high single-digit percentage.

Strong growth but low income

It also faces issues in China. Last October, the president of Astra’s Chinese business and other senior executives were held over suspected unpaid importation taxes of $900m. It could be fined up to five times that if found liable.

The news knocked the group’s market cap from £200bn towards £170bn. It’s now crept back up to £181bn. October was a good time to buy.

Net debt rose in 2024, from $22.5bn to $24.6bn, as the group poured money into R&D. It still generated enough cash to lift the dividend, but the 2.2% forecast yield isn’t exactly stellar.

Another concern is that AstraZeneca generates 44% of its sales in the US, and could be hit by Donald Trump’s trade wars, or the anti-big pharma stance by Trump’s health secretary Robert F Kennedy.

The healthcare sector undoubtedly offers a massive opportunity as the world gets older and sicker, and medicine more marvellous.

Richard Hunter, head of markets at Interactive Investor, says AstraZeneca remains the “preferred play in the sector, given its prospects for the foreseeable future”.

GSK has got a lots of catching up to do, but given lower expectations and lower valuation (and higher 3.9% yield), it’s still the one I’m holding on to.