After a year of solid growth into 2022, leading pharmaceutical company AstraZeneca (AZN)’s robust pipeline and recent launches look promising. In addition, the strong fundamentals should enable the stock to deliver solid returns this year. AZN could therefore be an ideal buy. Keep reading.
Headquartered in Cambridge, UK, the leading pharmaceutical company AstraZeneca PLC (AZN) surpassed analysts’ EPS estimates in the fiscal fourth quarter ending December 2022. Total revenue in 2022 increased 19% year-over-year to $44.35 billion, or 24% in constant currency.
The growth came from all therapy areas and the addition of Alexion Pharmaceuticals, a US acquisition that was added to AZN’s accounts in July 2021. These and many other factors position AXN well to deliver solid returns in 2023.
For fiscal year 2023, AZN aims to continue investing in its pipeline and recent launches while improving profitability. It plans to initiate more than thirty Phase III trials this year, ten of which have the potential to reach sales of more than $1 billion in peak year.
In addition, AZN expects total revenue to grow low to mid-single digits for fiscal year 2023 and core EPS is expected to grow high single digits to low double digits. also forecasts a return to growth in China, one of its key markets, which should boost its revenue stream.
Over the past three years, AZN’s revenue has grown at a CAGR of 22.1%. During the same period, the company also recorded EBIT and net profit growth of 40.9% and 35.1% CAGR, respectively.
The stock is up 11.6% over the past year, closing its last trading session at $68.85.
Here’s what could affect AZN’s performance in the coming months:
Recent positive developments
On February 2, 2023, AZN and Amgen Inc.’s (AMGN) TEZSPIRE was approved in the US for self-administration in a single-use prefilled pen for patients 12 years and older with severe asthma.
TEZSPIRE is the only biologic approved for severe asthma with no phenotype or biomarker restriction within the approved label.1. This should help AZN address the unmet needs of asthma patients.
On January 9, 2023, AZN entered into a definitive agreement to acquire CinCor Pharma, Inc., a US-based clinical stage biopharmaceutical company focused on developing new treatments for resistant and uncontrolled hypertension and chronic kidney disease.
The transaction is expected to close in the first quarter of 2023 and will boost operating profit.
In addition, AZN completed the acquisition of Neogene Therapeutics Inc. in the same month. (Neogene), a global clinical-stage biotechnology company pioneering the discovery, development and manufacturing of next-generation T-cell receptor therapies that provide a novel cell therapy. approach to tackling cancer.
The acquisition should help AZN strengthen its cancer therapy portfolio.
Robust finances
During the fiscal fourth quarter of 2022, which ended December 31, 2022, AZN’s gross profit increased 12.5% year over year to $8.31 billion. Profit for the period came in at $902 million, compared to a loss of $346 million in the prior quarter.
Also, earnings per share came in at $0.58, compared to a loss per share of $0.22 in the prior year quarter, while the company reported EBITDA of $2.57 billion, up 35.5 % compared to the same quarter last year.
Attractive dividend payments
On February 9, AZN announced a quarterly dividend of $0.99 per share, payable March 27, 2023. The company has paid dividends for 23 consecutive years.
AZN pays an annual dividend of $1.97 per share, representing a yield of 2.83% at the current price. Dividend payments have grown at a CAGR of 1.2% over the past three years. The company has an average four-year dividend yield of 2.67%.
Favorable analyst estimates
Analysts expect AZN’s revenue to grow 2.7% year over year to $11.06 billion in the fiscal second quarter ending June 2023. Earnings per share for the same quarter are likely to grow marginally to $0 .86 compared to the quarter last year.
Similarly, earnings per share for the current fiscal year ending December 2023 are expected to grow 39.6% year-over-year to $4.65, while revenue is expected to grow 3.8% year-over-year to $46.02 billion.
In addition, the company has beaten its consensus revenue estimates in three of the last four quarters, which is pretty impressive.
High profitability
AZN’s 12-month gross profit margin of 80.57% is 44.7% higher than the industry average of 55.67%. The company’s 12-month EBITDA margin of 31.19% and 734.4% is higher than the industry average of 3.74%. It is 0.44x at 12 months asset turnover rate is 29% higher than the 0.34x industry average.
In addition, AZN’s 12-month ROCE, ROTC and ROTA at 8.62%, 7.61% and 3.41% are substantially higher than the negative industry averages of 39.49%, 22.09% and 30.63% respectively .
POWR ratings show promise
AZN has an overall rating of A, which equates to a strong buy in our POWR ratings system. The POWR ratings are calculated by considering 118 different factors, with each factor optimally weighted.
Our proprietary rating system also evaluates each stock based on eight different categories. AZN has an A grade for growth, consistent with its solid financial position.
The B rating for stability is justified by the 24-month beta of 0.21. In addition, the stock’s B-score for Sentiment is in line with analysts’ favorable expectations.
AZN is number 9 out of 173 shares in the Medical – Pharmaceuticals industry.
To access additional AZN assessments for growth and momentum, click here.
It boils down
AZN is currently trading above the 50-day and 200-day moving averages of 68.18 and 64.16 respectively, indicating an upward trend. In addition, the recent strategic acquisitions should help the company expand.
Pascal Soriot, Chief Executive Officer of AZN, said: “2022 was a year of continued strong business performance and execution of our long-term growth strategy. We made excellent progress in the pipeline with a record 34 approvals in key markets, and we are initiating late stage new trials for high potential drugs such as camizestrant, datopotamab deruxtecan and volrustomig.”
The share is expected to grow in 2023 and beyond, given its booming cancer, metabolic and rare disease drug lineup. Therefore, the stock could be an ideal buy.
How does AstraZeneca NV (AZN) Stacking up against his peers?
AZN has an overall POWR rating of A, which equates to a Strong Buy rating. Check out these other A-rated (Strong Buy) stocks within the medical-pharmaceutical industry: Novo Nordisk A/S (NVO), Bristol-Myers Squibb Company (BMJ), and Novartis AG ADR (NVS).
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AZN shares remained unchanged in premarket trading on Thursday. Year-to-date, AZN has gained 1.55%, versus a 4.21% gain in the benchmark S&P 500 index over the same period.
About the author: Kritika Sarmah
Her interest in risky instruments and passion for writing turned Kritika into an analyst and financial journalist. She received her bachelor’s degree in commerce and is currently attending the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.
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