ii view: AstraZeneca flags further growth in 2021

15th February 2021 11:38

Keith Bowman from interactive investor

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Innovation remains a high priority at this UK pharmaceutical giant. We assess prospects. 

Full-year results to 31 December

  • Currency adjusted revenue up 10% to $26.62 billion (£19.2 billion)
  • Pre-tax profit up 150% to $3.9 billion (£2.8 billion)
  • Core earnings per share (EPS) up 15% to $4.02 (£2.89)
  • Total dividend for the year unchanged at $2.80 (£2.07) per share
  • Net debt up 1.7% to $12.11 billion 

Guidance for 2021:

  • Total revenue is expected to increase by a low-teens percentage
  • Core EPS expected of between $4.75 to $5.00

Chief executive Pascal Soriot said:

"The performance last year marked a significant step forward for AstraZeneca. Despite the significant impact from the pandemic, we delivered double-digit revenue growth to leverage improved profitability and cash generation. The consistent achievements in the pipeline, the accelerating performance of our business and the progress of the Covid-19 vaccine demonstrated what we can achieve, while the proposed acquisition of Alexion is intended to accelerate our scientific and commercial evolution even further.

"Additional investment in new medicines continued to fuel our rapidly growing oncology and biopharmaceuticals therapy areas. Thanks to the focus on an industry-leading pipeline and consistent execution, I am confident that we will continue to deliver more progress for patients and sustained, compelling results."

ii round-up:

AstraZeneca (LSE:AZN) is a global, science-led biopharmaceutical company. Headquartered in Cambridge in the UK, it operates in over 100 countries. 

Oncology or cancer drugs at just over two-fifths of overall sales provide for Astra's biggest segment. Respiratory and immunology products generate another fifth of sales, with Cardiovascular, Renal and Metabolism (CVRM) compounds providing a third area of strength.

Tagrisso to treat cancer and Symbicort in the respiratory and immunology arena made for the company's two biggest-selling drugs in 2020, generating 16% and 10% of overall revenues respectively. 

For a round-up of these latest results, please click here

ii view:

The development and approval of its Covid-19 vaccine in conjunction with Oxford University clearly headed events for AstraZeneca during 2020. The making and supply of millions of doses of the non-profit vaccine to both the UK and other governments now provides its top priority during 2021. The ongoing development of its drug pipeline and the acquisition of US company Alexion add to the required juggling act by management. Alexion will both strengthen Astra's immunology and respiratory product portfolio and add the treatment of rare diseases to its prospects. 

But despite some headwinds from Covid-19 during 2020, disrupting other treatments, full-year results did still match previous 2020 management guidance. Accompanying management forecasts or guidance for 2021 point to further growth in revenues and earnings. This also excludes any potential tailwinds from both its Covid developments and the pending purchase of Alexion. 

For investors, time spent developing and rolling out its coronavirus vaccine is time away from its core business. The purchase of Alexion at what many analysts consider to be a full price is yet to justified. However, its Covid vaccine has raised its global profile significantly, and Alexion and the addition of rare disease treatments brings into focus over 7,000 known conditions of which only around 5% currently have US Food and Drug Administration-approved medicines. And a maintained dividend payment and historic yield of over 2.5% is also not unattractive in the current era of ultra-low interest rates. In all, and given both vaccine and other new drug successes over recent years, innovation clearly remains high, which is arguably the core ingredient for long-term pharmaceutical company success.   

Positives: 

  • New medicines accounted for 52% of 2020 total revenues
  • Alexion adds to its diversity of drug treatments

Negatives:

  • Respiratory & immunology sales retreated by 1% over 2020
  • Other medicine sales including those where patents have expired fell by 4% over 2020

The average rating of stock market analysts:

Strong buy

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

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