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Here’s why the Astrazeneca share price is flying today

Shares in FTSE 100 pharma giant AstraZeneca (LSE: AZN) rose strongly in early trading today as market participants lapped up the companys latest set of results.Personally, I wont be joining the queue for the shares. Heres why.

Returning to growth

Much of this mornings reaction is probably due to the 73bn-caps very strong performance in the final three months of 2018. Over this period, product sales growth of 5% (or up 8% at constant exchange rate) was recorded. With sales hitting $5.77bn while markets were tanking across the world, AstraZeneca was clearly having a very good end to the year.

The numbers over 2018 as a whole were also pretty decent.Product sales rose 4% to a little over $21bn, supported by launches of new medicines, such as asthma treatment Fasenra where sales hit $297m in only its first full year of availablity. The popularity of cancer treatments Tagrisso and Lynparza also helpedsales in AstraZenecasOncology arm rise by 50%.

Another interesting snippet was the excellent form the business had shown in emerging markets. Sales in China, for example, jumped 28% over the year.

Unsurprisingly, management was clearly happy with these figures. Having declared thatthecompany had returned to growth,CEO Pascal Soriot went on to state that itsstrategy and plans remain unchanged, with sales growth and a focus on cost management anticipated to drive growing operating profit.This all sounds very encouraging. So, are the shares still worth buying?

Looking dear

Taking into account todays positive reaction, AstraZenecasstock has now climbed 12% in value over just a couple ofweeks. I think theres certainly a chance this positive momentum will continue beyond today.

In addition to the shares still trading below the highs reached back in November, the companys defensive qualities arguably make it an ideal candidate for anxious investors, particularly with the US/China trade spat and Brexit still to be resolved.

Nevertheless, Im starting to question the price being paid.Before this morning, AstraZeneca was already trading on 20 times forecast earnings for the new financial year. That feels rather dear, considering that you can buy sector peer GlaxoSmithKlinefor a little under 14 times earnings (even if the latter is following a very different trajectory under CEO Emma Walmsley).

But what about the companys growth prospects? Well, a PEG ratio of below one suggests new investors in AstraZeneca would be getting plenty of potential for their cash. But this does rest on its ability to continue converting one of the most exciting and productive pipelines in the industryinto actual medicines that sell. In a world where getting new drugs approved is a highly unpredictable, time-consuming and costly process, thats easier said than done.

Thanks to its improving dividend cover, Glaxo also looks a better pick for income investors (something Ive been doubtful on previously). A forecast 80p cash return this year equates to a yield of 5.1% at the current share price. AstraZeneca, in contrast, is set to yield 3.6%, with the cash payout slightly less covered by profits.

All told, Im not sure Id be tempted to buy stock in AstraZeneca at the current time, particularly if Im only looking to pick up dividends from my investments. In my opinion (and as covered here), there are far less risky ways of generating a second income stream from the market.

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