The Nasdaq Composite and the Nasdaq-100 had a fantastic year in 2023. The Nasdaq-100, which includes the 100 most extensive non-financial Nasdaq stocks, achieved its highest return since 1999.
But what about 2024? History shows that the Nasdaq will keep going up this year. And there is one megacap stock that Wall Street thinks will be the star of the show.
The “Magnificent Seven” lose their shine. You might think that the “Magnificent Seven” stocks that dominated the market in 2023 would be the favourites for 2024. But you would be wrong. Wall Street analysts are not very bullish on these stocks.
Take Nvidia, for example. The GPU maker’s shares soared 239% last year. But now, analysts think that the stock is overvalued. Their average price target for the next 12 months is lower than the current share price.
The same applies to most of the other “Magnificent Seven” stocks. According to Wall Street’s price targets, Apple, Microsoft, Alphabet, and Meta Platforms are expected to decline.
Tesla is the only one that analysts think could make a small profit in the next 12 months. But even that is doubtful after the electric car company reported disappointing results for the fourth quarter of 2023.
Amazon is the only “Magnificent Seven” stock that Wall Street is somewhat optimistic about. The online retail and cloud giant has a price target that implies a 5% increase in the next 12 months. But that is not very impressive.
Wall Street’s Surprising mega-cap Pick
So, which megacap stock does Wall Street think will be the big winner this year?
It’s AstraZeneca (NASDAQ: AZN).
The drugmaker has a market value of about $208 billion, which makes it a megacap stock. But unlike the “Magnificent Seven”, AstraZeneca has not done well lately. Its shares have barely moved in the last 12 months.
However, Wall Street analysts see a lot of potential in AstraZeneca. Their average price target for the next 12 months is almost 22% higher than the current share price. That is the highest upside among all the megacap stocks on the Nasdaq. Even the most pessimistic analyst thinks AstraZeneca’s share price could increase slightly.
Why is Wall Street so keen on AstraZeneca?
Because the company could grow faster than any other big pharma company in the next few years, AstraZeneca has 127 late-stage drug programs in its pipeline. That is more than any other big pharma company. AstraZeneca plans to launch 15 new drugs by 2030.
AstraZeneca also has many strong products in the market right now. Its cancer drugs Imfinzi, Calquence, and Enhertu increased their sales by more than 26% year over year in the third quarter of 2023. Its diabetes drug Farxiga, its second-best-selling product, boosted its revenue by 40%. AstraZeneca has several other new and promising drugs as well.
Wall Street analysts also like AstraZeneca’s strategy of buying other companies. For instance, AstraZeneca bought CinCor in 2023 and is buying Gracell now.
Should you buy this pharma stock now?
We don’t know if AstraZeneca will go up by 20% or more in the next 12 months, as many Wall Street analysts predict. But we agree that AstraZeneca is an excellent stock to buy now.
The company does have one challenge. It will lose its patent protection for its ovarian cancer drug, Lynparza, in 2027. But AstraZeneca’s other products and pipeline drugs should be able to make up for any loss of revenue from Lynparza.
AstraZeneca’s stock price does not reflect its high growth potential. The stock trades at less than 15.9 times its expected earnings. And its PEG ratio, which measures how cheap a stock is relative to its growth, is meagre at 0.51. With this low valuation and high growth potential, AstraZeneca could outperform all of the “Magnificent Seven” stocks in 2024 and beyond.
Before you decide to buy AstraZeneca Plc stock, you should know this:
The Motley Fool Stock Advisor analysts have just revealed their top 10 stock picks for investors to buy right now… and AstraZeneca Plc is not on the list. These 10 stocks could deliver huge returns in the future.
Stock Advisor helps investors succeed by showing them how to build a portfolio, giving them regular updates from analysts, and offering them two new stock picks every month. The Stock Advisor service has beaten the S&P 500 more than three times since 2002.
Randi Zuckerberg, who used to work for Facebook and is the sister of Meta Platforms CEO Mark Zuckerberg, is on The Motley Fool’s board of directors. John Mackey, the CEO of Whole Foods Market, which Amazon owns, is also on The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is another member of The Motley Fool’s board of directors. Keith Speights owns Alphabet, Amazon, Apple, Meta Platforms, and Microsoft shares. The Motley Fool owns and recommends Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla.
