Is Zeneca Still Undervalued?

Zeneca's prospects are excellent and the shares are undervalued, according to BZW Research analysts, Steve Plag and James Dodwell.

They say that unlike many other major drug companies, Zeneca is not heavily reliant on cost savings, being driven by merger or acquisition, to feed growth of its pharmaceutical business. The quality of Zeneca's pharmaceutical growth is therefore of an order of higher magnitude, being primarily driven by increasing volume sales of new and existing products.

The analysts suggest that in the period from 1995 to 1999, the most important contributor to the growth of Zeneca's earnings and dividends will be the growth in turnover of the pharmaceutical division. Zeneca also has an agrochemicals business and a specialties division.