Headquartered in Cambridge, United Kingdom, leading pharma company AstraZeneca PLC (AZN) surpassed the analysts’ EPS estimates in the fiscal fourth quarter that ended December 2022. Its total revenue in 2022 rose 19% year-over-year to $44.35 billion, or by 24% at constant currency.
Its growth came from all therapy areas and the addition of Alexion Pharmaceuticals, a US acquisition that was added to AZN accounts in July 2021. These and many other factors position AXN well for delivering solid returns in 2023.
For the 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, of which ten have the potential to deliver peak-year sales of over $1 billion.
Moreover, AZN expects its total revenue to increase by a low-to-mid single-digit percentage, and its core EPS is expected to increase by a high single-digit to a low double-digit percentage for the fiscal year 2023. The company also predicts 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 22.1% CAGR. During the same period, the company also registered EBIT and net income growth at 40.9% and 35.1% CAGRs, respectively.
The stock has gained 11.6% over the past year to close the last trading session at $68.85.
Here’s what could influence AZN’s performance in the upcoming 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 pre-filled, single-use pen for patients aged 12 years and older with severe asthma.
TEZSPIRE is the only biologic approved for severe asthma with no phenotype or biomarker limitation within its approved label.1. This should help AZN address unmet needs for 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 novel treatments for resistant and uncontrolled hypertension and chronic kidney disease.
The transaction is expected to close in the first quarter of 2023 and boost the company’s bottom line.
Moreover, in the same month, AZN completed the acquisition of Neogene Therapeutics Inc. (Neogene), a global clinical-stage biotechnology company pioneering the discovery, development, and manufacturing of next-generation T-cell receptor therapies that offer a novel cell therapy approach for targeting cancer.
The acquisition should help AZN enhance its cancer therapy portfolio.
Robust Financials
During the fiscal 2022 fourth quarter that ended December 31, 2022, AZN’s gross profit increased 12.5% year-over-year to $8.31 billion. Its profit for the period came in at $902 million, compared to a loss of $346 million in the previous-year quarter.
Also, its EPS came in at $0.58, compared to a loss per share of $0.22 in the previous-year quarter, while the company reported an EBITDA of $2.57 billion, representing a rise of 35.5% from the prior-year quarter.
Attractive Dividend Payouts
On February 9, AZN announced a quarterly dividend of $0.99 per share, payable on March 27, 2023. The company has paid dividends for 23 consecutive years.
AZN pays a $1.97 per share dividend annually, which translates to a 2.83% yield on the current price. Its dividend payments have grown at a CAGR of 1.2% over the past three years. The company has a four-year average dividend yield of 2.67%.
Favorable Analysts’ Estimates
Analysts expect AZN’s revenue to rise 2.7% year-over-year to $11.06 billion in the fiscal second quarter ending June 2023. Its EPS for the same quarter will likely grow marginally to $0.86 from its prior-year quarter.
Similarly, its EPS for the current fiscal year ending December 2023 is expected to rise 39.6% year-over-year to $4.65, while its revenue is expected to increase 3.8% year-over-year to $46.02 billion.
Moreover, the company has surpassed its consensus revenue estimates in three of the trailing four quarters, which is quite impressive.
High Profitability
AZN’s trailing-12-month gross profit margin of 80.57% is 44.7% higher than the industry average of 55.67%. The company’s trailing-12-month EBITDA margin of 31.19% and 734.4% is higher than the industry averages of 3.74%. Its 0.44x trailing-12-month asset turnover ratio is 29% higher than the 0.34x industry average.
Additionally, AZN’s trailing-12-month ROCE, ROTC, and ROTA of 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 weighted to an optimal degree.
Our proprietary rating system also evaluates each stock based on eight distinct categories. AZN has an A grade for Growth, in sync with its robust financials.
Its B grade for Stability is justified by its 24-month beta of 0.21. In addition, the stock‘s B grade for Sentiment is consistent with favorable analysts’ expectations.
AZN is ranked #9 out of 173 stocks in the Medical – Pharmaceuticals industry.
To access additional AZN ratings for Growth and Momentum, click here.
Bottom Line
AZN is currently trading above its 50-day and 200-day moving averages of 68.18 and 64.16, respectively, indicating an uptrend. Moreover, its recent strategic acquisitions should help the company expand.
Pascal Soriot, Chief Executive Officer, of AZN, said, “2022 was a year of continued strong company performance and execution of our long-term growth strategy. We made excellent pipeline progress with a record 34 approvals in major markets, and we are initiating new late-stage trials for high potential medicines such as camizestrant, datopotamab deruxtecan, and volrustomig.”
The stock is poised to grow in 2023 and beyond, given its flourishing line-up of cancer, metabolic, and rare disease drugs. Hence, the stock could be an ideal buy.
How Does AstraZeneca PLC (AZN) Stack up Against Its Peers?
AZN has an overall POWR Rating of A, equating to a Strong Buy rating. Check out these other stocks within the Medical – Pharmaceuticals industry with an A (Strong Buy) rating: Novo Nordisk A/S (NVO), Bristol-Myers Squibb Company (BMY), and Novartis AG ADR (NVS).
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AZN shares were unchanged in premarket trading Thursday. Year-to-date, AZN has gained 1.55%, versus a 4.21% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.
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