Back to top

Image: Bigstock

AstraZeneca (AZN) Beats on Q4 Earnings but Misses on Sales

Read MoreHide Full Article

AstraZeneca PLC (AZN - Free Report) reported fourth-quarter 2016 core earnings of $1.21 per American Depositary Share, which comfortably beat the Zacks Consensus Estimate of 51 cents. Core earnings also rose 9% year over year at constant currency rates (CER).

 


AstraZeneca’s shares were up 0.9% so far this year, while the Zacks classified Large-Cap Pharma industry lost 0.3%.



Core earnings increased on the back of cost savings and a non-recurring tax benefit of 36 cents per share resulting from agreements on transfer pricing arrangements between various tax authorities.

However, sales were softer in the quarter.

Total revenue declined 12% at CER to $5.6 billion in the fourth quarter. Moreover, revenues marginally missed the Zacks Consensus Estimate.

Among the key growth platforms (representing 63% of total revenues), Diabetes, Emerging Markets and Brilinta performed well in the quarter, whereas Respiratory and Japan sales declined. New Oncology saw sequentially higher sales growth.

All growth rates mentioned below are on a year-over-year basis and at CER.

Quarter in Detail

Product sales declined 15% in the quarter to $5.26 billion, while externalization revenues were $325 million. Loss of exclusivity for Crestor and Nexium, lower Symbicort sales, and lack of FluMist sales (due to the U.S. Centers for Disease Contro's recommendation to not use FluMist this season) hurt the top line in the quarter.

U.S. sales plummeted 37% to $1.62 billion primarily due to the impact of the entry of generic versions of Crestor in the U.S. European markets witnessed a 3% decline in sales to $1.33 billion due to generic competition. Revenues from Emerging Markets were, however, up 7% to $1.49 billion in the reported quarter, supported by strong growth in China (up 8% to $609 million).

As far as AstraZeneca’s core products are concerned, sales of both Nexium and Crestor declined in the reported quarter.

Nexium recorded sales of $491 million (down 15%), with the U.S. contributing $135 million (down 23%) and Europe accounting for $61 million (down 19%). Similarly, Crestor sales declined 53% to $631 million, with the U.S. accounting for $95 million (down 88%) and Europe contributing $209 million (down 6%). U.S. sales declined sharply in the fourth quarter as multiple generic versions of the drug entered the market in Jul 2016.

Products that recorded growth in the quarter include Farxiga/Forxiga (up 57% to $239 million), Daliresp/Daxas (up 28% to $41 million), Pulmicort (up 8% to $288 million), Faslodex (up 19% to $222 million), Lynparza (up 72% to $62 million), Duaklir (up 58% to $19 million) and Seloken/Toprol-XL (up 14% to $178 million). Newly launched Tagrisso recorded sales of $147 million, up 10.5% sequentially. The upside was attributable to strong U.S. sales backed by strong patient demand and successful commercial launches across multiple markets. Another new medicine Movantik/Moventig recorded sales of $26 million in the quarter.

Brilinta/Brilique sales were $236 million in the reported quarter, up 37%. Sales were also up almost 13.47% sequentially as Brilinta maintained its leadership position in the U.S. branded oral anti-platelet market. Brilinta’s new-to-brand weekly prescription market share jumped to around 15% at the end of the year, representing an increase of around three percentage points. In Europe and China, Brilinta continued to put up an impressive performance.

Other Details

AstraZeneca’s core gross margin was down 2.6 to 79.3%. Core selling, general and administrative (SG&A) expenses decreased 14% to $2.05 billion due to the company’s productivity initiatives.

During the quarter, core research and development (R&D) expenses increased 2% at $1.48 billion.

2016 Results

Full-year sales dropped 5% year over year to $23.0 billion, marginally beating the Zacks Consensus Estimate.

Core earnings came in at $4.31 per ADS, comfortably surpassing the Zacks Consensus Estimate of $2.10. Core earnings fell 5% year over year at CER.

2017 Outlook

AstraZeneca issued its outlook for 2017. The company continues to expect total revenue to decline in the low-to-mid single-digit percentage range in 2017. Core earnings are expected to decline in the low-to-mid teen percentage. Based on the average exchange rates during the year, currency movements are expected to minimally impact the top line in 2017.

While adjusted R&D costs are expected to be broadly in line with the 2016 levels, the company anticipates a further reduction in SG&A costs, reflecting the evolving structure of its business.

Astrazeneca PLC Price, Consensus and EPS Surprise

 

Astrazeneca PLC Price, Consensus and EPS Surprise | Astrazeneca PLC Quote

Zacks Rank & Key Picks

AstraZeneca currently carries a Zacks Rank #4 (Sell). Some better-ranked stocks in the health care sector include Anika Therapeutics, Inc. (ANIK - Free Report) , Eli Lilly and Company (LLY - Free Report) and Enzo Biochem, Inc. (ENZ - Free Report) . While Anika sports a Zacks Rank #1 (Strong Buy), Enzo Biochem and Eli Lilly carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Anika’s earnings estimates increased from $2.06 to $2.14 for 2016 and from $2.09 to $2.10 for 2017 over the last 60 days. The company posted a positive surprise in all of the four trailing quarters with an average beat of 33.14%. Its share price increased 2.2% year to date.

Enzo Biochem’s loss estimates narrowed from 17 cents to 16 cents for 2017 over the last 60 days. The company posted a positive earnings surprise in three of the four trailing quarters with an average beat of 22.50%.

Eli Lilly’s earnings estimates increased from $3.99 to $4.11 for 2016 and from $4.31 to $4.37 for 2017 over the last 60 days. Its share price increased 5.2% year to date.

The Best Place to Start Your Stock Search

Today, you are invited to download the full list of 220 Zacks Rank #1 ""Strong Buy"" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 ""Strong Sells"" and other private research. See these stocks free >>

Published in