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AstraZeneca (AZN) Stock Up 27% in a Year: What Lies Ahead?

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AstraZeneca’s (AZN - Free Report) stock has risen 26.9% in the past year compared with an increase of 22.3% for the industry.

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The last year was an exceptional one for British drugmaker, AstraZeneca with regard to pipeline success as well as commercial execution across its entire portfolio of medicines. Its total revenues rose 38% in 2021 while earnings per share rose 37% at a constant exchange rate, driven by strong growth across its diversified business areas in multiple geographies.

Here we discuss how the company performed last year and its outlook for 2022.

2021 – A Fruitful Year for AstraZeneca

AstraZeneca witnessed double-digit sales growth in all major regions, including Emerging Markets despite the issues in China. Sales in China were hurt due to pricing pressure associated with the National Reimbursement Drug List (NRDL) and volume-based procurement (VBP) programs in the second half of the year. Emerging markets represents AstraZeneca’s largest market by product sales and accounts for around 33% of its total revenues. In Emerging Markets, sales in countries outside China rose 89% in 2021 due to increased contribution from the COVID-19 vaccine, Vaxzevria. Excluding COVID-19 vaccine sales, Emerging Markets sales rose 10% despite the pricing headwinds in China.

AstraZeneca also made the transformative acquisition of Alexion in the year. The acquisition added its blockbuster rare disease drugs, C5 inhibitors Soliris and Ultomiris, as well as a growing pipeline of candidates in rare diseases to AstraZeneca’s portfolio. The acquisition diversifies AstraZeneca’s portfolio, marking its foray into rare diseases, an increasingly attractive field.

AstraZeneca also made significant progress with its late-stage pipeline, reporting 14 positive phase III trial results across nine medicines in 2021. Two key medicines, Evusheld for the prevention of COVID-19 in certain high-risk populations and asthma drug, Tezspire were approved in 2021. AstraZeneca’s COVID-19 vaccine, Vaxzevria, developed in collaboration with the University of Oxford, was approved for temporary/conditional use in several countries in 2021 and generated $3.9 billion in sales.

What’s in Store for 2022 and Beyond?

AstraZeneca faces its share of headwinds. Its diabetes franchise faces stiff competition while pricing pressure is hurting sales in the respiratory unit. Sales of some medicines are being hurt due to COVID-19. Sales are also slowing down in China.  All these issues are expected to continue to put pressure on the top line in 2022.

Nonetheless, AstraZeneca’s newer drugs, mainly cancer medicines, Lynparza, Tagrisso and Imfinzi should keep driving revenues in 2022,with AstraZeneca launching them in more markets and an increased number of indications. AstraZeneca now has 13 blockbuster medicines in its portfolio with sales exceeding $1 billion, including newer medicines, Tagrisso, Fasenra, Farxiga, Imfinzi and Lynparza. Almost every new product it has launched in recent years has done well. The company is confident of seeing sustained growth for several years, driven by sales growth of its new medicines, Tagrisso, Imfinzi, Lynparza, Farxiga and Fasenra.

AstraZeneca expects a decline in its total revenues from COVID-19 medicines in 2022 by a low-to-mid-twenties percentage, with an expected decline in sales of the COVID-19 vaccine being partially offset by growth in Evusheld sales.

AstraZeneca expects a mid-single-digit percentage decline in revenues in China in 2022 from 2021. However, the decline in China is expected to be offset by strong growth in ex-China emerging markets where it expects a mid-single-digit sales growth in 2022

With regard to the pipeline, several phase III data readouts are lined up in 2022. The drugs added with Alexion should continue to boost its top line.

Zacks Rank & Stocks to Consider

AstraZeneca currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the drug/biotech sector include Vertex Pharmaceuticals (VRTX - Free Report) , Voyager Therapeutics (VYGR - Free Report) and Gamida Cell (GMDA - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Vertex Pharmaceuticals’ stock has risen 10.1% this year. Estimates for Vertex Pharmaceuticals’ 2022 earnings have gone up from $13.39 to $14.52 per share while the same for 2023 have increased from $14.10 to $15.31 per share over the past 60 days.

Vertex Pharmaceuticals’ earnings performance has been strong, with the company beating earnings expectations in each of the last four quarters. Vertex Pharmaceuticals delivered a four-quarter earnings surprise of 10.01%, on average.

Voyager Therapeutics’ loss estimates narrowed from $2.20 per share to $1.35 per share for 2022 and from $1.93 per share to $1.37 per share for 2023 in the past 60 days. Voyager Therapeutics’ stock is up 128.8% this year so far.

Voyager Therapeutics’ earnings performance has been decent, with the company beating earnings expectations in three of the last four quarters while missing in one. Voyager Therapeutics has a four-quarter earnings surprise of 41.0%, on average.

Estimates for Gamida Cell’s 2022 bottom line have narrowed from a loss of $1.83 to $1.35 per share in the past 60 days. Gamida Cell’s stock is up 31.5% this year so far.

Gamida Cell beat estimates in two of the last four quarters while missing in the other two, with the average negative surprise being 22.6%.

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