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AstraZeneca (AZN) Q1 Earnings & Sales Beat Estimates, Stock Up
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AstraZeneca’s (AZN - Free Report) first-quarter 2024 core earnings of $1.03 per American depositary share (ADS) beat the Zacks Consensus Estimate of 95 cents. Core earnings of $2.06 per share rose 7% year over year on a reported basis and 13% at constant exchange rates (“CER”).
Total revenues of $12.68 billion rose 17% on a reported basis and 19% at CER, driven by rising product sales and continued growth in Alliance revenues from partnered medicines. Revenues also beat the Zacks Consensus Estimate of $11.92 billion.
All growth rates mentioned below are on a year-over-year basis and at CER.
Product Sales
Product sales rose 18% to $12.18 billion, driven by sales of key drugs across various therapeutic areas. Oncology product sales were up 26%, while Cardiovascular, Renal and Metabolism (CVRM) product sales rose 23%. The Respiratory & Immunology (R&I) segment gained 17%. Vaccines & Immune (V&I) therapies sales declined 34%. Rare disease product sales were up 16%. Sales of other medicines remained flat year over year.
Alliance revenues rose 59% to $457 million, driven by continued growth in revenues from partnered medicines. These revenues included $339 million from Daiichi Sankyo for Enhertu and $77 million of AstraZeneca’s share of gross profits in the United States from partner Amgen (AMGN - Free Report) for Tezspire.
Collaboration revenues were $45 million in the quarter, up 66%, generated entirely from the achievement of a sales-related milestone for Farxiga.
Sales of Some Key Drugs
In Oncology, Tagrisso recorded sales of $1.60 billion, up 15%, on strong demand as a first-line and adjuvant treatment. However, this upside was partially offset by mandatory price reductions in Japan. Tagrisso sales beat the Zacks Consensus Estimate of $1.51 billion and our model estimate of $1.55 billion.
Imfinzi generated sales of $1.11 billion in the quarter, up 33% year over year, driven by increased use in recent launches like biliary tract and hepatocellular carcinoma cancers and rising patient demand across SCLC and Stage IV NSCLC indications. Imfinzi sales missed the Zacks Consensus Estimate of $1.17 billion and our estimate of $1.20 billion.
Lynparza product revenues rose 11% year over year to $705 million, driven by increased global demand for the drug across all approved indications. Lynparza sales missed the Zacks Consensus Estimate and our estimate of $722 million and $707 million, respectively.
AstraZeneca markets Lynparza in partnership with Merck (MRK - Free Report) . In the quarter, AstraZeneca did not recognize any collaboration revenues from partner Merck related to Lynparza.
In CVRM, Farxiga recorded product sales of $1.85 billion in the quarter, up 45% year over year, reflecting accelerated volume growth compared with the overall SGLT2 inhibitor class in general. The label expansion approvals for heart failure and chronic kidney disease (CKD) indications contributed to Farxiga’s sales growth in the United States and Europe. In Emerging markets, Farxiga is witnessing solid growth despite generic competition. Farxiga sales beat the Zacks Consensus Estimate of $1.63 billion and our model estimate of $1.57 billion.
In R&I, Symbicort sales rose 14% in the quarter to $769 million, driven by strong underlying demand in the United States and Emerging markets. Pulmicort sales rose 5% to $224 million.
Fasenra recorded sales of $358 million in the quarter, up 6% year over year. Fasenra sales missed the Zacks Consensus Estimate of $378 million and our model estimate of $377 million.
The new lupus drug, Saphnelo, recorded sales of $91 million in the quarter compared with $89 million in the previous quarter, driven by demand growth in the U.S. market and ongoing launches in Europe and Japan.
Tezspire, which AstraZeneca markets in partnership with Amgen, recorded product sales of $43 million compared with $35 million in the previous quarter. Amgen records sales in the United States and AstraZeneca records its share of U.S. gross profits as Alliance Revenue. AstraZeneca books Product Sales in markets outside the United States.
In the Rare Disease portfolio, Soliris recorded sales of $739 million, down 8% year over year due to conversion to Ultomiris. Soliris sales beat the Zacks Consensus Estimate of $726 million and our model estimate of $707 million.
Ultomiris revenues were $859 million, up 34%, driven by growth in neurology indications, geographic expansions in new markets and continued conversion from Soliris.
In the V&I segment, AstraZeneca recorded $26 million as Beyfortus product sales from products supplied to partner Sanofi (SNY - Free Report) . AstraZeneca and Sanofi’s RSV antibody Beyfortus was approved in the United States for the prevention of lower respiratory tract infection in newborns and infants last year.
AstraZeneca also recorded $20 million under Alliance revenues, which comprised its 50% share of gross profits on sales of Beyfortus in major markets outside the United States, received from Sanofi.
Profit Discussion
AstraZeneca’s core gross margin of 82% was down 1 percentage point at CER. Per management, the dilutive effect from profit-sharing arrangements and below-average margins in Emerging markets was partially offset by a positive mix due to increased contributions from oncology and rare disease medicines.
Core selling, general and administrative expenses increased 13% at CER to $3.41 billion due to market development for recent launches and pre-launch activities.
Core research and development expenses rose 18% to $2.7 billion due to increasing investment in the pipeline. The core operating margin was 34% in the quarter, down 1 percentage point on a CER basis.
2024 Guidance
Management reiterated its financial guidance for 2024. It expects total revenues to increase in the low double-digit to low teens percentage in 2024 at CER.
Core earnings per share are also expected to increase in the low double-digit to low teens percentage range.
While the foreign exchange is still expected to have a low single-digit percentage adverse impact on total revenues, management now expects a mid-single-digit percentage adverse impact on core EPS in 2024. Previously, a low single-digit percentage adverse impact was expected on core EPS.
Our Take
AstraZeneca’s fourth-quarter results were better than expected, as it beat estimates for both earnings and sales. Revenues of key drugs, Tagrisso and Farxiga, significantly beat expectations. Price reductions of some drugs in Japan hurt the top line in the quarter. Revenues across all segments, excluding V&I, clocked double-digit percentage growth in quarterly sales.
In response to the encouraging results, shares were up 5% in pre-market trading on Thursday. In the year so far, the stock has increased 5.7% compared with the industry’s 11.5% rise.
Image Source: Zacks Investment Research
Though both sales and core EPS rose during the quarter, the percentage rise in core EPS was less than that of total revenue growth due to a $241 million gain in the first quarter of 2023 following the disposal of the U.S. rights for Pulmicort Flexhaler.
Last month, AstraZeneca announced acquisitions of clinical-stage biotech Amolyt Pharma and Fusion Pharmaceuticals to strengthen its rare disease and oncology pipeline further. The Fusion acquisition will also provide the company with a foothold in the radiopharmaceutical drugs market. It also completed the acquisitions of Gracell Biotechnologies and Icosavax during the quarter, enabling management to accelerate its cell therapy and vaccine pipeline, respectively.
Through these acquisitions, management intends to explore different modalities, like cell and radiopharma therapies, to identify new treatment approaches.
Image: Bigstock
AstraZeneca (AZN) Q1 Earnings & Sales Beat Estimates, Stock Up
AstraZeneca’s (AZN - Free Report) first-quarter 2024 core earnings of $1.03 per American depositary share (ADS) beat the Zacks Consensus Estimate of 95 cents. Core earnings of $2.06 per share rose 7% year over year on a reported basis and 13% at constant exchange rates (“CER”).
Total revenues of $12.68 billion rose 17% on a reported basis and 19% at CER, driven by rising product sales and continued growth in Alliance revenues from partnered medicines. Revenues also beat the Zacks Consensus Estimate of $11.92 billion.
All growth rates mentioned below are on a year-over-year basis and at CER.
Product Sales
Product sales rose 18% to $12.18 billion, driven by sales of key drugs across various therapeutic areas. Oncology product sales were up 26%, while Cardiovascular, Renal and Metabolism (CVRM) product sales rose 23%. The Respiratory & Immunology (R&I) segment gained 17%. Vaccines & Immune (V&I) therapies sales declined 34%. Rare disease product sales were up 16%. Sales of other medicines remained flat year over year.
Alliance revenues rose 59% to $457 million, driven by continued growth in revenues from partnered medicines. These revenues included $339 million from Daiichi Sankyo for Enhertu and $77 million of AstraZeneca’s share of gross profits in the United States from partner Amgen (AMGN - Free Report) for Tezspire.
Collaboration revenues were $45 million in the quarter, up 66%, generated entirely from the achievement of a sales-related milestone for Farxiga.
Sales of Some Key Drugs
In Oncology, Tagrisso recorded sales of $1.60 billion, up 15%, on strong demand as a first-line and adjuvant treatment. However, this upside was partially offset by mandatory price reductions in Japan. Tagrisso sales beat the Zacks Consensus Estimate of $1.51 billion and our model estimate of $1.55 billion.
Imfinzi generated sales of $1.11 billion in the quarter, up 33% year over year, driven by increased use in recent launches like biliary tract and hepatocellular carcinoma cancers and rising patient demand across SCLC and Stage IV NSCLC indications. Imfinzi sales missed the Zacks Consensus Estimate of $1.17 billion and our estimate of $1.20 billion.
Lynparza product revenues rose 11% year over year to $705 million, driven by increased global demand for the drug across all approved indications. Lynparza sales missed the Zacks Consensus Estimate and our estimate of $722 million and $707 million, respectively.
AstraZeneca markets Lynparza in partnership with Merck (MRK - Free Report) . In the quarter, AstraZeneca did not recognize any collaboration revenues from partner Merck related to Lynparza.
In CVRM, Farxiga recorded product sales of $1.85 billion in the quarter, up 45% year over year, reflecting accelerated volume growth compared with the overall SGLT2 inhibitor class in general. The label expansion approvals for heart failure and chronic kidney disease (CKD) indications contributed to Farxiga’s sales growth in the United States and Europe. In Emerging markets, Farxiga is witnessing solid growth despite generic competition. Farxiga sales beat the Zacks Consensus Estimate of $1.63 billion and our model estimate of $1.57 billion.
In R&I, Symbicort sales rose 14% in the quarter to $769 million, driven by strong underlying demand in the United States and Emerging markets. Pulmicort sales rose 5% to $224 million.
Fasenra recorded sales of $358 million in the quarter, up 6% year over year. Fasenra sales missed the Zacks Consensus Estimate of $378 million and our model estimate of $377 million.
The new lupus drug, Saphnelo, recorded sales of $91 million in the quarter compared with $89 million in the previous quarter, driven by demand growth in the U.S. market and ongoing launches in Europe and Japan.
Tezspire, which AstraZeneca markets in partnership with Amgen, recorded product sales of $43 million compared with $35 million in the previous quarter. Amgen records sales in the United States and AstraZeneca records its share of U.S. gross profits as Alliance Revenue. AstraZeneca books Product Sales in markets outside the United States.
In the Rare Disease portfolio, Soliris recorded sales of $739 million, down 8% year over year due to conversion to Ultomiris. Soliris sales beat the Zacks Consensus Estimate of $726 million and our model estimate of $707 million.
Ultomiris revenues were $859 million, up 34%, driven by growth in neurology indications, geographic expansions in new markets and continued conversion from Soliris.
In the V&I segment, AstraZeneca recorded $26 million as Beyfortus product sales from products supplied to partner Sanofi (SNY - Free Report) . AstraZeneca and Sanofi’s RSV antibody Beyfortus was approved in the United States for the prevention of lower respiratory tract infection in newborns and infants last year.
AstraZeneca also recorded $20 million under Alliance revenues, which comprised its 50% share of gross profits on sales of Beyfortus in major markets outside the United States, received from Sanofi.
Profit Discussion
AstraZeneca’s core gross margin of 82% was down 1 percentage point at CER. Per management, the dilutive effect from profit-sharing arrangements and below-average margins in Emerging markets was partially offset by a positive mix due to increased contributions from oncology and rare disease medicines.
Core selling, general and administrative expenses increased 13% at CER to $3.41 billion due to market development for recent launches and pre-launch activities.
Core research and development expenses rose 18% to $2.7 billion due to increasing investment in the pipeline. The core operating margin was 34% in the quarter, down 1 percentage point on a CER basis.
2024 Guidance
Management reiterated its financial guidance for 2024. It expects total revenues to increase in the low double-digit to low teens percentage in 2024 at CER.
Core earnings per share are also expected to increase in the low double-digit to low teens percentage range.
While the foreign exchange is still expected to have a low single-digit percentage adverse impact on total revenues, management now expects a mid-single-digit percentage adverse impact on core EPS in 2024. Previously, a low single-digit percentage adverse impact was expected on core EPS.
Our Take
AstraZeneca’s fourth-quarter results were better than expected, as it beat estimates for both earnings and sales. Revenues of key drugs, Tagrisso and Farxiga, significantly beat expectations. Price reductions of some drugs in Japan hurt the top line in the quarter. Revenues across all segments, excluding V&I, clocked double-digit percentage growth in quarterly sales.
In response to the encouraging results, shares were up 5% in pre-market trading on Thursday. In the year so far, the stock has increased 5.7% compared with the industry’s 11.5% rise.
Image Source: Zacks Investment Research
Though both sales and core EPS rose during the quarter, the percentage rise in core EPS was less than that of total revenue growth due to a $241 million gain in the first quarter of 2023 following the disposal of the U.S. rights for Pulmicort Flexhaler.
Last month, AstraZeneca announced acquisitions of clinical-stage biotech Amolyt Pharma and Fusion Pharmaceuticals to strengthen its rare disease and oncology pipeline further. The Fusion acquisition will also provide the company with a foothold in the radiopharmaceutical drugs market. It also completed the acquisitions of Gracell Biotechnologies and Icosavax during the quarter, enabling management to accelerate its cell therapy and vaccine pipeline, respectively.
Through these acquisitions, management intends to explore different modalities, like cell and radiopharma therapies, to identify new treatment approaches.
AstraZeneca PLC Price
AstraZeneca PLC price | AstraZeneca PLC Quote
Zacks Rank
Currently, AstraZeneca has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.