Interactive Investor

ii view: AstraZeneca thinks 2023 could be blockbuster year

9th February 2023 15:38

by Keith Bowman from interactive investor

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This FTSE 100 pharma giant enjoyed a record 2022, and with a wide stable of cancer drugs, we assess prospects for 2023. 

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Full-year results to 31 December

  • Revenue up 25% to $44.4 billion
  • Currency adjusted core earnings per share up 33% to $6.66
  • Final dividend unchanged at $1.97 per share (161p)
  • Total dividend for the year of $2.90 (238p), up from 2021’s $2.87 per share 

Guidance:

  • Total Revenue is expected to increase by a low-to-mid single-digit percentage
  • Core EPS is expected to increase by a high single-digit to low double-digit percentage

ii round-up:

Pharma giant AstraZeneca (LSE:AZN) today detailed results broadly in line with City expectations, flagging hopes to initiate more than 30 phase III drug trials over the year ahead, with 10 'blockbusters' having potential to deliver peak year sales of over one billion dollars.

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A record 34 new drug approvals in 2022 helped push currency adjusted sales and earnings up by 25% and 33% respectively, with core earnings per share expected to increase by a high single-digit to low double-digit percentage in 2023. 

AstraZeneca shares rose by more than 3% in UK having come into this latest update by more than a quarter over the last year. Rival GSK (LSE:GSK), which in 2022 demerged its consumer healthcare business Haleon (LSE:HLN), is down by around 8%, while the FTSE 100 index is up almost 4%.

Sales for AstraZeneca’s cancer, or oncology drugs rose 15% to $15.5 billion compared with 2021, with revenues for its Cardiovascular, Renal and Metabolism (CVRM) compounds up 13% to $9.2 billion. Rare disease category sales, boosted by its 2021 acquisition of Alexion in the US, climbed 4% to $7 billion.

Fourth-quarter sales fell 6% year-over-year to $11.2 billion, impacted by falling demand for its Covid-19 vaccine Vaxzevria. Excluding pandemic related sales, revenues climbed 17%.

Accompanying management outlook comments pointed to an expected return to growth for its China business over 2023 following the country’s emergence from the pandemic.  

Astra's total 2022 dividend rose to $2.90 per share, up from 2021’s $2.87. 

ii view:

Anglo-Swedish pharmaceutical and biotech company AstraZeneca operates in over 100 countries. Its core drug focus include both cancer treatments and drugs for Cardiovascular, Renal and Metabolism (CVRM). Other areas include treatments for Rare Diseases and Vaccines and Immune therapies. 

For investors, sales in both its emerging markets and China regions declined in 2022, including falls in the final quarter. Acquisitions, such as its recently announced purchase of heart hypertension specialist CinCor in the US for up to $1.8 billion, are not without risk, while a first US tester trial in relation to product liability litigation for its Nexium product is expected in June. 

On the upside, progress in drug innovation and approvals continues. Cancer drug sales accounted for over a third of total revenues during 2022, China sales are forecast to return to growth, while small increases in the dividend payment have been made over the last two years. 

For now, and with analysts estimating a fair value share price of over £125, this Cambridge headquartered drugs giant looks to remain deserving of its place in investor portfolios. 

Positives: 

  • Cancer treatment sales now total around a third of overall sales
  • Acquisitions adding to diversity of drug treatments

Negatives:

  • Involved in various legal proceedings considered typical to its business, including litigation and government investigations
  • Currency movements can hinder

The average rating of stock market analysts:

Buy

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