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Bear of the Day: AstraZeneca (AZN)

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Headquartered in London, AstraZeneca (AZN - Free Report) is one of the largest biopharmaceutical companies in the world, focusing metabolic disease, cardiovascular, respiratory, immunology, and oncology therapeutics. The company recently acquired rare disease drugmaker Alexion for $39 billion; the deal added five marketed products to AZN’s pipeline.

Q3 Earnings Disappoint Wall Street

Shares of AZN slipped nearly 7% after the company reported third-quarter results a couple of weeks ago.

AstraZeneca’s revenue jumped 50% year-over-year to $9.9 billion, easily surpassing the consensus estimate of $9.4 billion. However, AZN posted a hefty loss of $1.10 per share on the bottom line due to significantly higher expenses related to the Alexion acquisition. Analysts were looking for earnings of $1.28 per share on average.

But, the Alexion purchase is already adding to top-line growth. Sales have been increasing for Ultomiris and Strensiq, which treat Paroxysmal Nocturnal Hemoglobinuria (PNH) and perinatal/infantile- and juvenile-onset hypophosphatasia (HPP), respectively, and have offset declines in the rare-disease drug Soliris.

AstraZeneca’s product lineup continues to demonstrate positive momentum, despite the earnings miss last quarter. In particular, its oncology franchise—this includes drugs like Tagrisso and Imfinzi—delivered solid growth.

Bottom Line

AZN is now a Zacks Rank #5 (Strong Sell).

Four analysts have cut their full year earnings outlook over the past 60 days, and the consensus estimate has fallen five cents to $2.62 per share. Wall Street has lowered its earnings picture for 2022 as well, but the bottom line is expected to post double-digit year-over-year growth.

Shares have been on a bumpy ride so far in 2021. Year-to-date, AZN is up only 12.7% compared to the S&P 500’s gain of 25.2%.

Looking ahead, AstraZeneca expects total revenue, excluding its Covid-19 vaccine, to grow by a “low-twenties percentage” for fiscal 2021, remaining in-line with prior-guidance. EPS is expected to increase to a range of $5.05 to $5.40 per share.

AZN also announced that it will begin selling its Covid-19 vaccine for a profit after promising not to do so during the pandemic. This, along with a potential Emergency Use Authorization for its preventative coronavirus antibody shot AZD7442 (known as Evusheld) and potential U.S. and European approval for its asthma drug tezepelumab, could help catalyze AZN and send shares higher.


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