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AstraZeneca's (AZN) Q3 Earnings Beat, EPS Growth View Up
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AstraZeneca’s (AZN - Free Report) third-quarter 2022 core earnings of 84 cents per American depositary share (ADS) beat the Zacks Consensus Estimate of 77 cents. Core earnings of $1.67 per share rose 55% year over year on a reported basis and 70% at constant exchange rates (CER).
Total revenues were $10.98 million, up 11% on a reported basis and 19% at CER in the quarter, driven by higher product sales. Revenues were in line with the Zacks Consensus Estimate.
All growth rates mentioned below are on a year-over-year basis and at CER.
Product Sales Rise
Product sales rose 16% at CER to $10.59 billion. Collaboration revenues were $392 million, almost tripling from the year-ago quarter levels.
Among AstraZeneca’s various therapeutic areas, Oncology product sales were up 22%. CVRM product sales were up 19%, while the Respiratory & Immunology segment gained 1%. Vaccines & Immune Therapies sales declined 21%. Rare disease product sales were up 11%. Sales of other medicines rose 30%.
Sales of Some Key Drugs
In Oncology, Lynparza product revenues rose 19% year over year to $659 million, owing to growth in use in breast, ovarian and prostate cancers in the United States as well as the launch in early breast cancer in the country in March. Increased use in first-line HRD-positive ovarian cancer and increased uptake for expanded label in breast cancer boosted sales in Europe.
AstraZeneca markets Lynparza in partnership with Merck (MRK - Free Report) . The profit-sharing deal between AstraZeneca and Merck was inked in 2017. In addition to Lynparza, the deal included Koselugo.
AstraZeneca & Merck’s Lynparza is approved for four cancer types, namely ovarian, breast, prostate and pancreatic. Lynparza is also being evaluated in an earlier-line setting for the approved cancer indications as well as some other cancer types.
Tagrisso recorded sales of $1.4 billion, up 20% year over year on strong demand as a first-line and adjuvant treatment. Increased use of Tagrisso for the first-line setting in China and continued growth in other Emerging Markets offset the negative impact of the National Reimbursement Drug List (NRDL) price reduction in China.
Imfinzi generated sales of $737 million in the quarter, up 26% year over year, driven by increased demand for ES-SCLC indication. AstraZeneca witnessed some recovery in lung cancer diagnosis rates, mainly in the United States and Europe.
Calquence generated sales of $566 million in the quarter, up 63% year over year, benefiting from the increased new patient market share.
Sales of AstraZeneca’s legacy cancer drugs, such as Iressa, Faslodex, Arimidex and Casodex declined during the quarter. However, sales of Zoladex rose in the quarter.
In CVRM, Brilinta/Brilique sales were $338 million in the reported quarter, down 7% year over year, primarily due to the slower post-pandemic recovery of oral antiplatelet medicines like Brilinta in the United States and the EU and pricing pressure from the VBP (volume-based procurement) program in China.
Farxiga recorded product sales of $1.1 billion in the quarter, up 50% year over year, reflecting volume growth across all regions and growth of the SGLT2 inhibitor class in general. The label expansion approvals for heart failure with reduced ejection fraction and chronic kidney disease indications contributed to Farxiga’s sales growth in the United States and Europe. In Emerging markets, Farxiga is witnessing growth in ex-China Emerging Markets.
In Respiratory & Immunology, Symbicort sales declined 1% in the quarter to $630 million. Pulmicort sales declined 31% to $145 million.
Fasenra recorded sales of $353 million in the quarter, up 15% year over year, driven by increased market share performance in Europe and the United States due to market leadership. However, sales are being hurt somewhat due to price erosion in Japan.
AstraZeneca’s new triple combo COPD treatment Breztri recorded sales of $103 million in the quarter compared with $93 million in the previous quarter.
New lupus drug, Saphnelo (anifrolumab) recorded sales of $33 million in the quarter, compared with $24 million in the previous quarter.
In the Rare Disease portfolio, which was added following the Alexion acquisition in July 2021, Soliris recorded sales of $901 million, down 6% year over year due to conversion to Ultomiris. Ultomiris and Strensiq sales were $518 million and $237 million, up 47 and 20%, respectively.
In Other Medicines, sales of Nexium rose 36% to $311 million.
In Vaccines & Immune Therapies, AstraZeneca’s COVID-19 vaccine, Vaxzevria, generated $173 million of revenues, much less than $451 million in the previous quarter due to the conclusion of many initial contracts. No revenues were recorded in the U.S. market in the second and third quarters of 2022.
AZN’s COVID-19 antibody cocktail medicine Evusheld generated $537 million in sales, compared with $445 million in the previous quarter.
Profit Discussion
AstraZeneca’s core gross margin of 80.8% was up 7 percentage points at CER as the dilutive effect from profit-sharing arrangements and increased pricing pressure in China was offset by a positive mix due to increased contribution from oncology and rare disease medicines. Core selling, general and administrative expenses increased 16% to $3.16 billion.
Core research and development expenses rose 16% to $2.36 billion. Core operating profit rose 63% to $3.41 billion in the quarter. The core operating margin was 31.1% in the quarter, up 9% year over year.
2022 Guidance
AstraZeneca expects total revenues to increase in the low twenties percentage in 2022, same as the previous expectations.
Core earnings are expected to increase in the high twenties to low thirties percentage versus the previous expectation of the mid-to-high twenties percentage in 2022.
Foreign exchange is expected to have a mid-single-digit percentage adverse impact on total revenues and a mid-to-high single-digit adverse impact on core EPS in 2022 (previously mid-single-digit).
Our Take
AstraZeneca’s third-quarter results were encouraging as it beat estimates for earnings while sales came in line with the consensus mark. Product sales growth was driven by higher sales of key medicines across Oncology and CVRM units like Tagrisso and Farxiga, which offset lower sales of some key older medicines like Brilinta and Symbicort. Higher collaboration revenues also boosted the top line.
AstraZeneca maintained its sales growth guidance for 2022 while raising its earnings growth expectations.
AstraZeneca’s stock was up 3.9% in pre-market trading on Thursday in response to the better-than-expected results and earnings guidance raise.
The stock has risen 4.9% this year so far compared with an increase of 4.2% for the industry.
Image Source: Zacks Investment Research
AstraZeneca is making rapid progress across its pipeline. AstraZeneca said it has received 19 approvals in major markets since it announced its second quarter and half-yearly results in August and also announced encouraging data from several pipeline programs
Vertex Pharmaceuticals’ stock has risen 40.8% this year. Estimates for Vertex’s 2022 earnings have gone up from $14.21 to $14.61 per share, while those for 2023 have increased from $15.09 to $15.60 per share over the past 30 days.
Vertex has a four-quarter earnings surprise of 3.16%, on average.
Bayer’s stock is down 5.6% this year so far. Earnings of Bayer beat estimates in three of the last four quarters, the average surprise being 18.23%. Its earnings estimates for 2022 and 2023 have remained stable in the past 30 days.
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AstraZeneca's (AZN) Q3 Earnings Beat, EPS Growth View Up
AstraZeneca’s (AZN - Free Report) third-quarter 2022 core earnings of 84 cents per American depositary share (ADS) beat the Zacks Consensus Estimate of 77 cents. Core earnings of $1.67 per share rose 55% year over year on a reported basis and 70% at constant exchange rates (CER).
Total revenues were $10.98 million, up 11% on a reported basis and 19% at CER in the quarter, driven by higher product sales. Revenues were in line with the Zacks Consensus Estimate.
All growth rates mentioned below are on a year-over-year basis and at CER.
Product Sales Rise
Product sales rose 16% at CER to $10.59 billion. Collaboration revenues were $392 million, almost tripling from the year-ago quarter levels.
Among AstraZeneca’s various therapeutic areas, Oncology product sales were up 22%. CVRM product sales were up 19%, while the Respiratory & Immunology segment gained 1%. Vaccines & Immune Therapies sales declined 21%. Rare disease product sales were up 11%. Sales of other medicines rose 30%.
Sales of Some Key Drugs
In Oncology, Lynparza product revenues rose 19% year over year to $659 million, owing to growth in use in breast, ovarian and prostate cancers in the United States as well as the launch in early breast cancer in the country in March. Increased use in first-line HRD-positive ovarian cancer and increased uptake for expanded label in breast cancer boosted sales in Europe.
AstraZeneca markets Lynparza in partnership with Merck (MRK - Free Report) . The profit-sharing deal between AstraZeneca and Merck was inked in 2017. In addition to Lynparza, the deal included Koselugo.
AstraZeneca & Merck’s Lynparza is approved for four cancer types, namely ovarian, breast, prostate and pancreatic. Lynparza is also being evaluated in an earlier-line setting for the approved cancer indications as well as some other cancer types.
Tagrisso recorded sales of $1.4 billion, up 20% year over year on strong demand as a first-line and adjuvant treatment. Increased use of Tagrisso for the first-line setting in China and continued growth in other Emerging Markets offset the negative impact of the National Reimbursement Drug List (NRDL) price reduction in China.
Imfinzi generated sales of $737 million in the quarter, up 26% year over year, driven by increased demand for ES-SCLC indication. AstraZeneca witnessed some recovery in lung cancer diagnosis rates, mainly in the United States and Europe.
Calquence generated sales of $566 million in the quarter, up 63% year over year, benefiting from the increased new patient market share.
Sales of AstraZeneca’s legacy cancer drugs, such as Iressa, Faslodex, Arimidex and Casodex declined during the quarter. However, sales of Zoladex rose in the quarter.
In CVRM, Brilinta/Brilique sales were $338 million in the reported quarter, down 7% year over year, primarily due to the slower post-pandemic recovery of oral antiplatelet medicines like Brilinta in the United States and the EU and pricing pressure from the VBP (volume-based procurement) program in China.
Farxiga recorded product sales of $1.1 billion in the quarter, up 50% year over year, reflecting volume growth across all regions and growth of the SGLT2 inhibitor class in general. The label expansion approvals for heart failure with reduced ejection fraction and chronic kidney disease indications contributed to Farxiga’s sales growth in the United States and Europe. In Emerging markets, Farxiga is witnessing growth in ex-China Emerging Markets.
In Respiratory & Immunology, Symbicort sales declined 1% in the quarter to $630 million. Pulmicort sales declined 31% to $145 million.
Fasenra recorded sales of $353 million in the quarter, up 15% year over year, driven by increased market share performance in Europe and the United States due to market leadership. However, sales are being hurt somewhat due to price erosion in Japan.
AstraZeneca’s new triple combo COPD treatment Breztri recorded sales of $103 million in the quarter compared with $93 million in the previous quarter.
New lupus drug, Saphnelo (anifrolumab) recorded sales of $33 million in the quarter, compared with $24 million in the previous quarter.
In the Rare Disease portfolio, which was added following the Alexion acquisition in July 2021, Soliris recorded sales of $901 million, down 6% year over year due to conversion to Ultomiris. Ultomiris and Strensiq sales were $518 million and $237 million, up 47 and 20%, respectively.
In Other Medicines, sales of Nexium rose 36% to $311 million.
In Vaccines & Immune Therapies, AstraZeneca’s COVID-19 vaccine, Vaxzevria, generated $173 million of revenues, much less than $451 million in the previous quarter due to the conclusion of many initial contracts. No revenues were recorded in the U.S. market in the second and third quarters of 2022.
AZN’s COVID-19 antibody cocktail medicine Evusheld generated $537 million in sales, compared with $445 million in the previous quarter.
Profit Discussion
AstraZeneca’s core gross margin of 80.8% was up 7 percentage points at CER as the dilutive effect from profit-sharing arrangements and increased pricing pressure in China was offset by a positive mix due to increased contribution from oncology and rare disease medicines. Core selling, general and administrative expenses increased 16% to $3.16 billion.
Core research and development expenses rose 16% to $2.36 billion. Core operating profit rose 63% to $3.41 billion in the quarter. The core operating margin was 31.1% in the quarter, up 9% year over year.
2022 Guidance
AstraZeneca expects total revenues to increase in the low twenties percentage in 2022, same as the previous expectations.
Core earnings are expected to increase in the high twenties to low thirties percentage versus the previous expectation of the mid-to-high twenties percentage in 2022.
Foreign exchange is expected to have a mid-single-digit percentage adverse impact on total revenues and a mid-to-high single-digit adverse impact on core EPS in 2022 (previously mid-single-digit).
Our Take
AstraZeneca’s third-quarter results were encouraging as it beat estimates for earnings while sales came in line with the consensus mark. Product sales growth was driven by higher sales of key medicines across Oncology and CVRM units like Tagrisso and Farxiga, which offset lower sales of some key older medicines like Brilinta and Symbicort. Higher collaboration revenues also boosted the top line.
AstraZeneca maintained its sales growth guidance for 2022 while raising its earnings growth expectations.
AstraZeneca’s stock was up 3.9% in pre-market trading on Thursday in response to the better-than-expected results and earnings guidance raise.
The stock has risen 4.9% this year so far compared with an increase of 4.2% for the industry.
Image Source: Zacks Investment Research
AstraZeneca is making rapid progress across its pipeline. AstraZeneca said it has received 19 approvals in major markets since it announced its second quarter and half-yearly results in August and also announced encouraging data from several pipeline programs
Zacks Rank & Stocks to Consider
AstraZeneca has a Zacks Rank #3 (Hold).
AstraZeneca PLC Price, Consensus and EPS Surprise
AstraZeneca PLC price-consensus-eps-surprise-chart | AstraZeneca PLC Quote
Some better-ranked large drugmakers include Vertex Pharmaceuticals (VRTX - Free Report) and Bayer (BAYRY - Free Report) , each of which has a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Vertex Pharmaceuticals’ stock has risen 40.8% this year. Estimates for Vertex’s 2022 earnings have gone up from $14.21 to $14.61 per share, while those for 2023 have increased from $15.09 to $15.60 per share over the past 30 days.
Vertex has a four-quarter earnings surprise of 3.16%, on average.
Bayer’s stock is down 5.6% this year so far. Earnings of Bayer beat estimates in three of the last four quarters, the average surprise being 18.23%. Its earnings estimates for 2022 and 2023 have remained stable in the past 30 days.