Anyone tempted to take profits on AZN?

[TUK020]

AZN has had a remarkable run in share price recently, and yield is consequently drooping.
Article in FT today indicates that it is rather fully valued.
Anyone tempted to unload and redeploy funds elsewhere?

[Arborbridge]

AZN has had a remarkable run in share price recently, and yield is consequently drooping.
Article in FT today indicates that it is rather fully valued.
Anyone tempted to unload and redeploy funds elsewhere?

Yes, tempted - but with this C-19 around, I can't help feeling it's a good company to be in, and there is always the dilemma of finding somewhere better for the proceeds.
I want to enjoy the ride whilst I can, but not get caught in a dramatic retrenchment. The way I know of doing that to decided what drop you would tolerate, then set a trailing stoploss.
I haven't done that yet, but I ought to.

BTW, my intention would be not to sell out, but to trim.

Arb.

[Wizard]

AZN has had a remarkable run in share price recently, and yield is consequently drooping.
Article in FT today indicates that it is rather fully valued.
Anyone tempted to unload and redeploy funds elsewhere?

Yes, tempted - but with this C-19 around, I can't help feeling it's a good company to be in, and there is always the dilemma of finding somewhere better for the proceeds.
I want to enjoy the ride whilst I can, but not get caught in a dramatic retrenchment. The way I know of doing that to decided what drop you would tolerate, then set a trailing stoploss.
I haven't done that yet, but I ought to.

BTW, my intention would be not to sell out, but to trim.

Arb.

If you would be trimming because AZN had become too big relative to other holdings wouldn't a dramatic retrenchment fix that?

[Dod101]

Not in the least tempted. I too read the article but the OP must decide for himself. His /her needs will not be the same as everyone elses. Anyway I need the dividend.

Dod

[ADrunkenMarcus]

AZN has had a remarkable run in share price recently, and yield is consequently drooping.
Article in FT today indicates that it is rather fully valued.
Anyone tempted to unload and redeploy funds elsewhere?

No.

And the dividend is forecast to be twice covered by free cash flow by 2022.

[Arborbridge]

AZN has had a remarkable run in share price recently, and yield is consequently drooping.
Article in FT today indicates that it is rather fully valued.
Anyone tempted to unload and redeploy funds elsewhere?

Yes, tempted - but with this C-19 around, I can't help feeling it's a good company to be in, and there is always the dilemma of finding somewhere better for the proceeds.
I want to enjoy the ride whilst I can, but not get caught in a dramatic retrenchment. The way I know of doing that to decided what drop you would tolerate, then set a trailing stoploss.
I haven't done that yet, but I ought to.

BTW, my intention would be not to sell out, but to trim.

Arb.

If you would be trimming because AZN had become too big relative to other holdings wouldn't a dramatic retrenchment fix that?

Yes, I've used that method before! - and it doesn't taste too good.

Arb.

[Breelander]

Anyone tempted to unload and redeploy funds elsewhere?

In the current exceptional circumstances I'm not tempted to unload anything that the market sees as a strong long term buy. If the price disparity should remain when the future prospect of potential replacements becomes clearer, then would be the time to think about it. Right now there's too much risk that anything 'elsewhere' is about to cut their dividends.

[moorfield]

AZN has had a remarkable run in share price recently, and yield is consequently drooping.
Article in FT today indicates that it is rather fully valued.
Anyone tempted to unload and redeploy funds elsewhere?

And where do the funds get redeployed? That's a harder question for an income investor in current times and should be answered first. I'm holding on to AZN.

And the dividend is forecast to be twice covered by free cash flow by 2022.

Hm. Revenues have been pretty flat and the static dividend hasn't been covered by free cash flow for the last five years. A pinch of salt needed with that forecast I think, unless the dividend is halved by 2022 then yes it would be twice covered

[ADrunkenMarcus]

Hm. Revenues have been pretty flat and the static dividend hasn't been covered by free cash flow for the last five years. A pinch of salt needed with that forecast I think, unless the dividend is halved by 2022 then yes it would be twice covered

This was all well-flagged as management made clear in advance there would be a period where they would maintain the dividend despite it being uncovered. They've held the dividend flat in Dollar terms since 2011. What happened was they had a huge patent cliff in the mid 2010s that Pascale Soirot had to fix - the previous chief executive seemed more focused on buying back shares!

At AZN's recent peak, the share price was up 372% for me since 1998 and its paid substantially more than its book cost in dividends.

Best wishes

Mark.

[TUK020]

AZN has had a remarkable run in share price recently, and yield is consequently drooping.
Article in FT today indicates that it is rather fully valued.
Anyone tempted to unload and redeploy funds elsewhere?

And where do the funds get redeployed? That's a harder question for an income investor in current times and should be answered first. I'm holding on to AZN.

At current yield, I am not so much seeing AZN as an 'income' share. I was toying with the idea of switching this capital into SMT or Monks as a lower risk way of achieving long term growth.

[yorkshirelad1]

AZN has had a remarkable run in share price recently, and yield is consequently drooping.
Article in FT today indicates that it is rather fully valued.
Anyone tempted to unload and redeploy funds elsewhere?

FT article:
AstraZeneca's rise to the FTSE top spot feels like a sell signal
Sat 16 May 2020
Bryce Elder / Inside London p.16

https://www.google.co.uk/search?q=site%3Aft.com+astrazeneca&oq=site%3Aft.com+astrazeneca

Here's AZN's div in sterling terms



(I really wish I could do more with the bbcode to format better to make the data more readable, but the functionality doesn't seem to be available on TLF presently)

[tjh290633]

I did trim AZN in March, when it was overweight by my standards, at 6,893p. At Friday's close it was 26% higher, and had been higher than that midweek. Currently at 137% of my median holding value, if it rises further and/or reaches over 150% of the median, then I shall trim it again. It might be overvalued, but in these times who can determine that? Only the market, I suggest.

TJH

[G3lc]

Not temped in the slightest - if the dividend looks safe, could see to buying more.

[scrumpyjack]

One can only determine if they are over or under valued if you can accurately value their drug development pipeline. I very much doubt the FT has a better view on that than anyone else.

I must admit I sold out a while ago as I really didn't like the accounting shenanigans (Core profits and all that rubbish) but I have to admit Soriot has turned round their development programme and come up trumps. All credit to him.

The current medical crisis has also, I think, made investors value pharma companies more highly.

[BT63]

I've been thinking about this a lot for the last couple of weeks because AZN have been a major holding of mine for a decade.

AZN look very expensive on current valuation measures and it's very tempting to dump the lot. My finger hovers over the sell button.

Here's what causes me to hesitate:

1. They are now entering a period of growth from new drugs and a tailwind from Coronavirus.

2. All companies in a sector tend to become overvalued (or undervalued) at the same time but their peer GSK are not overvalued, therefore I wonder if the market is simply pricing-in the next few years of growth from AZN's new drugs.

3. Analyst estimates - for what they're worth - expect earnings per share to almost double in the next 4 years which would bring AZN's currently-stretched-looking valuation and yield back to a similar level to their low-growth peer GSK.

4. AZN are one of the few companies that aren't significantly affected by this crisis and are continuing with the dividend payments in a world where income is becoming hard to find. Anyone needing income will be drawn to them, especially as the dividend looks set to become strongly underpinned by sales growth from the new drugs.

5. If I sell, everything is wrecked so I don't know where else to put the money, other than maybe a tracker (although I think FTSE has priced in too much good news).

6. The FT has a habit of being wrong more often than it is right and I generally treat their articles as a contrarian indicator.

.

[daveh]

I was thinking of trimming them back a while ago for two reasons, they were closing in on twice median size (of my portfolio) and the report on how they make their accounts look better with the exclusion of not so exceptional costs from the profit and EPS figures, such that their dividend is well uncovered compared to 'real' earnings.

I held back as I'm a fairly hands off investor once I've bought holdings. This seems to have been a wise move with the corona virus situation and I will probably hold of longer to see how they go at increasing the EPS such that the dividend is covered, I may re-visit the top slicing decision in a year or so if they are still over 2x median, but will see how they are doing on growing EPS and what alternative options are available at the time for released monies.

Interestingly my one go at top slicing was SGRO which I top sliced twice at £6.44 in May 18 and at £7.28 in June 19. SGRO is still ahead of those prices now and is one of my few shares paying a dividend. The shares (ETFs) I've moved the money into have done worse (VVAL which is off topic for here and VWRL) down by 28% and 5% respectively. So at the moment I'm just letting the portfolio run reinvesting dividends and some new money (mostly in prefs., ITs, or ETFs).

[77ss]

Certainly not in the sense of selling the lot, but I did trim last week when it hit 9000.

Things can always go wrong and I prefer not to be too overweight in any one share.

[MrHedgehog]

To answer the question of what to replace AZN with, if you want to stay within the same sector you might want to look at Roche (Swiss holding) and/or Novo Nordisk (Danish holding).

I can't pass any meaningful comment on whether or not AZN is over-valued and should be sold. I have thought it has been for many months now but the price keeps rising, and I keep holding.

Will

[AJC5001]

I can't pass any meaningful comment on whether or not AZN is over-valued and should be sold. I have thought it has been for many months now but the price keeps rising, and I keep holding.

Will

What you need is a different strategy.

How about a "Run your Winners" strategy?
Or a " Trailing Stop Loss" strategy?
Perhaps a "Momentum" strategy?
Even a "Growth" strategy?

Anyway, they're all Total Returns strategies, so off-topic here.

Now if only we had a board to discuss them!

Adrian

[midgesgalore]

I've been thinking about this a lot for the last couple of weeks because AZN have been a major holding of mine for a decade.

...
5. If I sell, everything is wrecked so I don't know where else to put the money, other than maybe a tracker (although I think FTSE has priced in too much good news).
...
.

Hi BT63
I hold and have no plans to trim / sell or whatever.
It would be instructive for you to compare the YTD, 1yr, 3yr, 5yr or 10 year chart of AstraZeneca to, for example, iShares FTSE 100 ETF, ISF, or Vanguard world tracker, VWRL.
You would see either of the ETFs are significantly less of an investment than AZN over any of the periods of years. My AZN holding period is only 5 years.

I think daveh was alluding to much the same thing above with his choices of ETF.

midgesgalore