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Is AstraZeneca (AZN) a Portfolio Must-Have Pre-Q2 Earnings?
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AstraZeneca (AZN - Free Report) will report its second-quarter earnings on Jul 25, before market open. The Zacks Consensus Estimate for sales and earnings is pegged at $12.57 billion and 96 cents per share, respectively. Earnings estimates for AstraZeneca have risen from $4.04 per share to $4.05 per share for 2024 and from $4.67 per share to $4.69 per share for 2025 over the past 30 days.
Image Source: Zacks Investment Research
Earnings Surprise History
The healthcare bellwether’s performance has been mixed, with the company exceeding earnings expectations in three of the trailing four quarters while missing in one. It delivered a four-quarter earnings surprise of 6.79%, on average. In the last reported quarter, the company delivered an earnings surprise of 8.42%.
Image Source: Zacks Investment Research
What Does Our Model Say?
AstraZeneca has an Earnings ESP of -0.42% and a Zacks Rank #3 (Hold). Per our proven model, companies with the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 have a good chance of delivering an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Factors Shaping Upcoming Results
Sales of AstraZeneca’s key medicines, mainly cancer drugs — Lynparza, Tagrisso and Imfinzi — and diabetes medicine Farxiga are expected to have driven the company’s top line in the second quarter backed by strong demand trends.
Regarding Tagrisso, the approval for frontline NSCLC based on FLAURA2 study data in February 2024 is likely to have pushed up sales.
While Lynparza sales are expected to have risen year over year, the declining use of the PARP inhibitors class of drugs, increasing competition in the United States and price reduction in Japan might have hurt sales to some extent.
Approvals for new indications are likely to have boosted sales of some key drugs like Imfinzi and Farxiga.
The Zacks Consensus Estimate for Tagrisso, Farxiga and Imfinzi is pegged at $1.60 billion, $1.78 billion and $1.21 billion, respectively.
Our model estimates for Tagrisso, Farxiga and Imfinzi are $1.64 billion, $1.78 billion and $1.25 billion, respectively.
AstraZeneca’s other drugs, Fasenra, Calquence and Breztri, and newer products, asthma drug Tezspire, breast cancer drug Truqap and lupus drug Saphnelo (anifrolumab), are likely to have contributed to sales growth in the soon-to-be-reported quarter.
Investors will be keen to know the initial sales number of AstraZeneca’s new products like Voydeya, for treating extravascular hemolysis in adults with the rare disease paroxysmal nocturnal hemoglobinuria (PNH), Wainua (in partnership with Ionis [(IONS - Free Report) ]), for hereditary transthyretin-mediated amyloidosis, commonly referred to as ATTRv-PN, and respiratory syncytial virus (RSV) antibody Beyfortus (in partnership with Sanofi [(SNY - Free Report) ]).
Sales of key respiratory medicine Symbicort, rose in the first quarter due to strong underlying demand in the United States and emerging markets, which offset the impact of generic erosion in Europe and Japan. It remains to be seen if the positive trend continued in the second quarter. The Zacks Consensus Estimate for Symbicort is $541 million, while our model estimate is $557.3 million.
Sales of AstraZeneca’s major legacy drugs have been declining due to rising generic competition. The trend is likely to have continued in the second quarter.
Sales of AstraZeneca’s Rare Disease drugs like Ultomiris and Strensiq are expected to have been strong and contributed to the top line.
Alliance revenues might be an important contributor to the top line, driven by continued growth in royalties and profit share from partnered medicines. Collaboration revenues (upfront and milestone payments) are also expected to increase substantially in 2024.
AstraZeneca’s operating costs are expected to have increased due to increased investment in launches for new products Airsupra, Wainua and Truqap and increasing investment in the pipeline.
Nonetheless, a single quarter’s results are not so important for long-term investors. Let us delve deeper to understand whether to buy, sell or hold AstraZeneca stock.
Price Performance & Valuation
AstraZeneca stock has risen 16.9% so far this year, slightly underperforming an increase of 19.2% for the industry, as seen in the chart below. AstraZeneca’s stock has, however, outperformed the sector and S&P 500.
AstraZeneca Stock Performance
Image Source: Zacks Investment Research
From a valuation standpoint, AstraZeneca appears attractive relative to the industry. Going by the price/earnings ratio, the company’s shares currently trade at 17.88 forward earnings, lower than 19.93 for the industry. The shares are also trading below their 5-year average mean of 18.71.
AZN Stock Valuation
Image Source: Zacks Investment Research
AstraZeneca boasts a diversified geographical footprint as well as a diverse product portfolio with several blockbuster medicines. It now has 12 blockbuster medicines in its portfolio with sales exceeding $1 billion, including Tagrisso, Fasenra, Farxiga, Imfinzi, Lynparza, Soliris and Ultomiris. These drugs are driving the company’s top line with AstraZeneca launching them in more markets and in an increased number of indications.
Oncology is AstraZeneca’s biggest segment. AstraZeneca is working on strengthening its oncology product portfolio through label expansions of existing products and progressing oncology pipeline candidates. AstraZeneca has been making significant progress with its pipeline in other areas like cardiovascular health, immunology and rare diseases.
Backed by its new products and pipeline drugs, AstraZeneca believes it can post industry-leading top-line growth in the 2025-2030 period. AstraZeneca expects to generate $80 billion in total revenues by 2030. By the said time frame, AstraZeneca plans to launch 20 new medicines. It believes that many of these new medicines will have the potential to generate more than $5 billion in peak-year revenues.
AstraZeneca’s stock has been trading above its 200-day moving average since the end of March. It has an attractive dividend yield of around 4%.
However, AstraZeneca’s diabetes franchise faces stiff competition while the respiratory unit is being hurt by pricing pressure.
Conclusion
No matter how the second-quarter results play out, we suggest investors who own AstraZeneca stock stay invested, as the company has the potential to generate consistent profits. Buying the stock of this fundamentally strong company at its present reasonable valuation can prove prudent for long-term investors who are interested in buying blue-chip companies.
Image: Bigstock
Is AstraZeneca (AZN) a Portfolio Must-Have Pre-Q2 Earnings?
AstraZeneca (AZN - Free Report) will report its second-quarter earnings on Jul 25, before market open. The Zacks Consensus Estimate for sales and earnings is pegged at $12.57 billion and 96 cents per share, respectively. Earnings estimates for AstraZeneca have risen from $4.04 per share to $4.05 per share for 2024 and from $4.67 per share to $4.69 per share for 2025 over the past 30 days.
Earnings Surprise History
The healthcare bellwether’s performance has been mixed, with the company exceeding earnings expectations in three of the trailing four quarters while missing in one. It delivered a four-quarter earnings surprise of 6.79%, on average. In the last reported quarter, the company delivered an earnings surprise of 8.42%.
What Does Our Model Say?
AstraZeneca has an Earnings ESP of -0.42% and a Zacks Rank #3 (Hold). Per our proven model, companies with the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 have a good chance of delivering an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Factors Shaping Upcoming Results
Sales of AstraZeneca’s key medicines, mainly cancer drugs — Lynparza, Tagrisso and Imfinzi — and diabetes medicine Farxiga are expected to have driven the company’s top line in the second quarter backed by strong demand trends.
Regarding Tagrisso, the approval for frontline NSCLC based on FLAURA2 study data in February 2024 is likely to have pushed up sales.
While Lynparza sales are expected to have risen year over year, the declining use of the PARP inhibitors class of drugs, increasing competition in the United States and price reduction in Japan might have hurt sales to some extent.
Approvals for new indications are likely to have boosted sales of some key drugs like Imfinzi and Farxiga.
The Zacks Consensus Estimate for Tagrisso, Farxiga and Imfinzi is pegged at $1.60 billion, $1.78 billion and $1.21 billion, respectively.
Our model estimates for Tagrisso, Farxiga and Imfinzi are $1.64 billion, $1.78 billion and $1.25 billion, respectively.
AstraZeneca’s other drugs, Fasenra, Calquence and Breztri, and newer products, asthma drug Tezspire, breast cancer drug Truqap and lupus drug Saphnelo (anifrolumab), are likely to have contributed to sales growth in the soon-to-be-reported quarter.
Investors will be keen to know the initial sales number of AstraZeneca’s new products like Voydeya, for treating extravascular hemolysis in adults with the rare disease paroxysmal nocturnal hemoglobinuria (PNH), Wainua (in partnership with Ionis [(IONS - Free Report) ]), for hereditary transthyretin-mediated amyloidosis, commonly referred to as ATTRv-PN, and respiratory syncytial virus (RSV) antibody Beyfortus (in partnership with Sanofi [(SNY - Free Report) ]).
Sales of key respiratory medicine Symbicort, rose in the first quarter due to strong underlying demand in the United States and emerging markets, which offset the impact of generic erosion in Europe and Japan. It remains to be seen if the positive trend continued in the second quarter. The Zacks Consensus Estimate for Symbicort is $541 million, while our model estimate is $557.3 million.
Sales of AstraZeneca’s major legacy drugs have been declining due to rising generic competition. The trend is likely to have continued in the second quarter.
Sales of AstraZeneca’s Rare Disease drugs like Ultomiris and Strensiq are expected to have been strong and contributed to the top line.
Alliance revenues might be an important contributor to the top line, driven by continued growth in royalties and profit share from partnered medicines. Collaboration revenues (upfront and milestone payments) are also expected to increase substantially in 2024.
AstraZeneca’s operating costs are expected to have increased due to increased investment in launches for new products Airsupra, Wainua and Truqap and increasing investment in the pipeline.
Nonetheless, a single quarter’s results are not so important for long-term investors. Let us delve deeper to understand whether to buy, sell or hold AstraZeneca stock.
Price Performance & Valuation
AstraZeneca stock has risen 16.9% so far this year, slightly underperforming an increase of 19.2% for the industry, as seen in the chart below. AstraZeneca’s stock has, however, outperformed the sector and S&P 500.
AstraZeneca Stock Performance
From a valuation standpoint, AstraZeneca appears attractive relative to the industry. Going by the price/earnings ratio, the company’s shares currently trade at 17.88 forward earnings, lower than 19.93 for the industry. The shares are also trading below their 5-year average mean of 18.71.
AZN Stock Valuation
AstraZeneca boasts a diversified geographical footprint as well as a diverse product portfolio with several blockbuster medicines. It now has 12 blockbuster medicines in its portfolio with sales exceeding $1 billion, including Tagrisso, Fasenra, Farxiga, Imfinzi, Lynparza, Soliris and Ultomiris. These drugs are driving the company’s top line with AstraZeneca launching them in more markets and in an increased number of indications.
Oncology is AstraZeneca’s biggest segment. AstraZeneca is working on strengthening its oncology product portfolio through label expansions of existing products and progressing oncology pipeline candidates. AstraZeneca has been making significant progress with its pipeline in other areas like cardiovascular health, immunology and rare diseases.
Backed by its new products and pipeline drugs, AstraZeneca believes it can post industry-leading top-line growth in the 2025-2030 period. AstraZeneca expects to generate $80 billion in total revenues by 2030. By the said time frame, AstraZeneca plans to launch 20 new medicines. It believes that many of these new medicines will have the potential to generate more than $5 billion in peak-year revenues.
AstraZeneca’s stock has been trading above its 200-day moving average since the end of March. It has an attractive dividend yield of around 4%.
However, AstraZeneca’s diabetes franchise faces stiff competition while the respiratory unit is being hurt by pricing pressure.
Conclusion
No matter how the second-quarter results play out, we suggest investors who own AstraZeneca stock stay invested, as the company has the potential to generate consistent profits. Buying the stock of this fundamentally strong company at its present reasonable valuation can prove prudent for long-term investors who are interested in buying blue-chip companies.
You can see the complete list of today’s Zacks #1 Rank stocks here.