Interactive Investor

Two FTSE 100 heavyweights demonstrate their worth

27th April 2023 15:56

by Graeme Evans from interactive investor

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Two companies with the highest share prices on the UK stock market reassured investors on an otherwise difficult day for domestic shares.

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Forecast–beating AstraZeneca (LSE:AZN) and London Stock Exchange Group (LSE:LSEG) helped justify their recent share price progress today by posting robust first-quarter AGM statements.

The Cambridge-based drug company, which is the biggest stock by market value in the FTSE 100 index, held revenues steady at $10.88 billion (£8.7 billion) despite the loss of $1.46 billion (£1.2 billion) of Covid product sales in the period.

The Q1 figure beat City expectations by 3%, with Astra also above estimates at the bottom line with a core operating profit of $3.95 billion (£3.2 billion) some 11% stronger than forecasts.

Analysts at UBS said the biggest upside came in Astra’s cardiovascular, renal and metabolism franchise, with Crestor performing particularly well in emerging markets.

Respiratory was 7% ahead of expectations mainly due to asthma treatment Symbicort, while oncology was slightly above consensus as a result of strong Imfinzi sales.

In a statement ahead of the company’s AGM, chief executive Pascal Soriot pointed out that total revenue excluding Covid medicines increased 15%.

He added: “Our performance in emerging markets was particularly strong and I am impressed by the growth and pace of innovation I see in China, which underscores the competitive advantage of our leading presence in this country.”

Soriot left full-year guidance unchanged, including a forecast for earnings per share to increase by a high single-digit to low double-digit percentage.

The shares were 9,656p in October and 10,280p in early February before rallying to above 12,250p earlier this week. They fell back yesterday following results by rival GSK (LSE:GSK), but were in positive territory today in a session that consolidated the recent gains.

London Stock Exchange shares also built on their progress, having rallied to 8,056p in recent weeks as investors finally show signs of warming to December’s announcement of a strategic partnership with Microsoft (NASDAQ:MSFT).

Today’s first-quarter update backed up that momentum as LSE’s total income of £2 billion represented stronger-than-expected constant currency growth of 7.5%.

This was driven by strong performances in data and analytics and post trade, whereas capital markets missed targets due to the impact of lacklustre stock market conditions.

Bank of America said one of its key takeaways from the update concerned the growth in annual subscription value to 7.6%, from 6.2% in December.

It reiterated a price target of 9,550p, still below the level seen in January 2021 of 10,000p.

The bank said: “The LSE does not look optically cheap, but we think it offers strong value for money, given its high-quality top line and operating leverage.

“This update supports our argument that it should rerate towards the US peers, given its long-term growth potential.”

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