- New target to achieve $80 billion revenue by 2030
- Core operating margin in mid-thirties percentage
- Upward earnings revisions expected
AstraZeneca (AZN) has revealed a new target to grow revenue by 75% from the $45.8 billion generated in 2023 to $80 billion by 2030, driven by ‘significant’ growth in its existing portfolio of medicines and by launching 20 new medicines by the end of the decade.
The company will also focus on efficient execution and drive operating leverage to achieve a mid-thirties core operating margin by 2026. More detailed information is expected to be released throughout today’s investor meeting.
There was speculation ahead the investor meeting the company would raise its growth target which is reflected in the rather muted 1% gain in the shares.
WHAT DID THE CEO SAY?
Chief executive Pascal Soriot commented: ‘Today AstraZeneca announces a new era of growth. In 2023 we delivered the ambitious $45 billion revenue goal set a decade ago. With the exciting growth of our innovative pipeline, which has the potential to transform millions of lives, we are now aiming for $80 billion by 2030.
‘We are planning to launch 20 new medicines by 2030, many with the potential to generate more than $5 billion in peak year revenues. The breadth of our portfolio together with continued investment in innovation supports sustained growth well past the end of the decade.’
The headline revenue growth target is 25% above current consensus analyst’s forecasts of $64.2 billion according to Shore Capital's healthcare analyst Sean Conroy whose own estimate is $67.2 billion.
Conroy said the key question is how AstraZeneca has arrived at the $80 billion revenue target, but ‘material’ upgrades to long term revenue forecasts could now be on the horizon.
‘Taking this $80 billion target and 34% to 36% core operating margin range we believe suggests core operating profit of $27.2 billion to $28.8 billion in full year 2030, which is ahead of consensus (of £25 billion) and our forecasts (£25.5 billion), so longer-term upgrades to earnings could still be on the cards, assuming the $80 billion looks deliverable based on the information conveyed today’, explained Conroy.
Investment director Russ Mould at AJ Bell commented: ‘An easy way for AstraZeneca to achieve such a goal would be to go on a spending spree and buy up rival companies. However, AstraZeneca implies it will hit the goal through organic means which would be all the more impressive.
‘Chief executive Pascal Soriot is no stranger to controversy over the scale of his pay packet so perhaps he is trying to justify the large renumeration with the new growth plan. Achieving the goal would imply significant value generation for shareholders and no doubt himself given that part of his bonus scheme will be based on company performance.’
Disclaimer: Investment services company AJ Bell referenced in the article owns Shares magazine. The author of the article (Martin Gamble) and the editor (Steven Frazer) own shares in AJ Bell.
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