- Earnings and sales beat market expectations in first half
- Sales growth guidance increased to low-twenties percentage
- Core EPS guidance unchanged (mid-to-high 20%)
Pharmaceutical giant AstraZeneca (AZN) delivered better than expected revenues and profits in the first half through June and upgraded full year revenue growth guidance.
Despite the positive update, a ‘risk-on’ day for markets meant defensive sectors like healthcare were out of favour and the shares dipped 1.3% to £107.3.
Total revenues increased 48% to $22.16 billion with all franchises contributing to growth. The acquisition of Rare drugs specialist Alexion also added to growth in the half.
The cancer franchise, representing 34% of total revenues, grew by 18% year-on-year to $7.45 billion.
Cardiovascular, Renal & Metabolism sales increased by 14% to $4.57 billion driven by a strong performance from chronic kidney and heart failure drug Farxiga which grew sales by 55% to $2.11 billion. The division generated 21% of overall revenues.
Respiratory and Immunology sales were relatively stable and grew by 3% to $2.98 billion in the half. The Rare diseases division grew revenues by 5% on a like-for-like basis.
EARNINGS BEAT AND RAISED SALES GUIDANCE
Core operating income increased by 87% to $3.37 billion, around 3% ahead of market expectations while core earnings per share were ahead by 89% to $1.72, around 8% above analysts’ expectations.
Stronger than expected first half trading led the company to increase full year sales growth guidance to a low-twenties percentage from high teens previously.
Covid-19 product sales guidance has been upgraded to flat compared with a low-to-mid twenties percentage decline previously.
Core operating expenses are now expected to increase by a mid-to-high teens percentage up from a low-to-mid teens percentage.
The company plans to increase research and development spending due to positive drug trials data and up marketing spending to support new launches.
This includes the company’s long-acting Covid-19 antibody drug Evusheld.
Consequently, full year core earnings per share growth guidance remains unchanged at a mid-to-high twenties percentage.
AstraZeneca announced that Michel Demare would succeed Leif Johansson as chair of the board who retires in April 2023.
Susie Jana, pharma analyst at Shore Capital, reiterated her buy recommendation on the shares based on ‘industry-leading earnings growth and pipeline prospects’.
