- Q4 sales and earnings beat consensus
- Total dividend raised by 7% to $3.10
- Double-digit 2025 EPS growth target
Shares in mega-cap pharmaceutical maker AstraZeneca (AZN) leapt to the top of the FTSE 100 leader board, gaining almost 5% after the company delivered a strong final quarter and despite what appeared to be a slightly below-market earnings outlook.
Over the last 12 months, the shares have gained 11%, lagging the blue-chip index’s 13% advance, reflecting worries over Astra’s Chinese business which is under investigation for allegedly importing some of its drugs illegally.
CHINA CRISIS?
Sheena Berry, healthcare analyst at Quilter Cheviot commented: ‘China has proven to be an overhang on the stock following the fraud investigations of several individuals, and questions remain on exactly what impact this might have on operations in China.’
AJ Bell investment director Russ Mould said: ‘China import-related tax issues won’t derail the business. They’re just noise and any fines will be small-fry relative to the typical outflows from a company the size of AstraZeneca.’
In today’s update, management said the company had received a notice from the Shenzhen City Customs Office for suspected unpaid taxes of $0.9 million in relation to importation taxes on cancer drugs Imfinzi and Imjudo.
A fine of between one and five times the amount of unpaid taxes may be levied if Astra is found liable, the company said.
STRONG MOMENTUM
Outside of China, the business appears to be in rude health with total revenue for the year to £31 December rising 21% driven by strong growth from Astra’s portfolio of cancer treatments.
Core EPS (earnings per share) increased 19% to $8.21, and the company hiked the final dividend to $2.10 bring the total payout to $3.10 per share, a 7% increase on the previous year.
Looking ahead, the company expects to deliver 2025 revenue growth in the high single-digits and core EPS by a low double-digit percentage, as well as increasing the dividend.
Chief executive Pascal Soriot said: ‘This year marks the beginning of an unprecedented, catalyst-rich period for our company, an important step on our Ambition 2030 journey to deliver $80 billion Total Revenue by the end of the decade.
‘In 2025 alone, we anticipate the first Phase III data for seven new medicines, along with several important new indication opportunities for our existing medicines.’
LIGHT GUIDANCE
Shore Capital’s Sean Conroy noted the company's earnings growth forecast for 2025 appeared to be around 3% below the consensus, implying downward revisions.
Conroy is looking to trim his core 2025 EPS forecast of $9.53 which implies year-on-year growth of 16%, above management’s latest guidance.
‘The period ahead will be particularly catalyst-rich for AstraZeneca with multiple pivotal readouts expected through to the end-2025 which should help to support conviction around the deliverability of its 2030 ambition for $80bn Total Revenue,’ said Conroy.
Disclaimer: Financial services company AJ Bell referenced in the article owns Shares magazine. The author (Martin Gamble) and the editor (Ian Conway) own shares in AJ Bell.
