- Q4 earnings miss consensus expectations
- 2024 guidance in line with forecasts
- EPS expected to increase 12% to 14%
A fourth quarter earnings miss and in line 2024 guidance was enough to send AstraZeneca (AZN) to the bottom of the FTSE leaderboard on Thursday with the shares dropping 4% to £100.86.
Over the last year, the shares have lagged the blue-chip FTSE 100 index by around two percentage points, but are well ahead on a five-year basis, gaining 80% against an 8% gain for the index.
HIGHER COST DRAG
For the three months to 31 December total revenue excluding Covid-19 medicines grew 16% to $12.03 billion, in line with expectations.
Higher operating costs related to the phasing of expenses, as well as increased investments ahead of new product launches, meant core operating income came in around 14% shy of consensus expectations according to Shore Capital’s healthcare analyst Sean Conroy.
Full year sales and core EPS (earnings per share) increased 15% to $45.48 billion and $7.26 respectively, towards the upper end of company guidance.
AstraZeneca anticipates delivering 2024 sales and core EPS percentage growth in the low double digits to low teens range, in line with current consensus expectations.
CEO Pascal Soriot commented: ‘As AstraZeneca celebrates its 25th anniversary, we are pleased to report another year of strong financial performance and scientific progress, with double-digit earnings growth, and investment in exciting areas of science, including antibody drug conjugates and cell therapies, that lay the foundations for long-term success.
‘We expect another year of strong growth in 2024, driven by continued adoption of our medicines across geographies. Our differentiated and growing portfolio of approved medicines, global reach and rich R&D pipeline give us confidence that we will continue to deliver industry-leading growth.’
EXPERT VIEWS
Shore Capital’s Conroy said he expects to nudge up his 2024 revenue forecast by 1% to 2% and revise down his EPS forecast by the same amount to bring him in line with guidance.
‘AZN shares trade on a FY25F PER of c.14x broadly in line with the US and European peer group (mean - 15.7x, median – 13.4x). We continue to believe a premium is warranted based on its earnings growth and pipeline prospects.’
Russ Mould, investment director at AJ Bell, said: ‘Many investors view AstraZeneca as invincible given its success in recent years, yet its latest results showed that even the mighty can disappoint.
‘AstraZeneca is under constant pressure to keep driving growth and that means success in the laboratory as well as products already on the market. AstraZeneca’s pipeline looks busy, but success is never guaranteed.’
Disclaimer: Financial services company AJ Bell referenced in the article owns Shares magazine. The author of the article (Martin Gamble) and the editor of the article (James Crux) own shares in AJ Bell.
