The FTSE 100-listed AstraZeneca PLC (GB:AZN) agreed to pay $425 million in settlement to resolve lawsuits in the United States related to its heartburn medications, Nexium and Prilosec. The settlement covers various lawsuits that were under consideration in the U.S. District Court for the District of New Jersey, as well as in the Superior Courts of both Delaware and New Jersey.
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The company announced that its decision to settle ongoing claims does not imply an acknowledgment of the validity of the claims. AstraZeneca has highlighted that the settlement will allow the company to maintain its focus on its primary objectives without the distraction of prolonged legal proceedings and hefty litigation costs.
The stock traded down by 0.35% on Tuesday. Over the last six months, the company’s stock has experienced a huge loss of around 45% in trading.
AstraZeneca is a prominent global pharmaceutical company that serves billions of people worldwide. The company operates in three main categories: Oncology, Rare Disease, and BioPharmaceuticals.
The Backdrop
Nexium and Prilosec are over-the-counter drugs and are primarily prescribed to treat conditions such as frequent heartburn and ulcers. These drugs have been lucrative for AstraZeneca, generating significant sales since their initial approval.
Nonetheless, the company has faced thousands of lawsuits in recent years for Nexium and Prilosec. These legal actions allege that the company inadequately communicated the risks of kidney disease associated with the use of these drugs to doctors and patients.
Analysts’ Reactions
Analysts see this settlement as a positive change for the company. Today, analyst Sachin Jain from Bank of America Securities reiterated his Buy rating on the stock, predicting a growth rate of 33%.
Moreover, Barclays assigned a Buy rating to the stock today at a price target of 13,500p, implying a change of 24% from the current level.
Is AstraZeneca Share a Good Buy?
As per the consensus rating on TipRanks, AZN stock received a Strong Buy rating, supported by 10 Buy and three Hold recommendations. The AstraZeneca share price forecast stands at 12,718p, signifying a potential upside of 16.5% in the share price.
