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AstraZeneca (AZN) Q1 Earnings Beat, Revenues Meet Estimates

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AstraZeneca PLC (AZN - Free Report) reported first-quarter 2017 core earnings of 99 cents per American Depositary Share, which comfortably beat the Zacks Consensus Estimate of 38 cents. Core earnings, however, decreased 4% year over year at constant currency rates (CER).

 

AstraZeneca’s shares gained 12.9% so far this year, while the Zacks classified Large Cap Pharma industry registered an increase of 5.9%.



Core earnings decreased due to lower revenues, partly offset by continued focus on cost control.

Total revenue declined 10% at CER to $5.4 billion in the reported quarter. Revenues were in line with the Zacks Consensus Estimate.

Among the key growth platforms (representing 66% of the total revenue), Emerging Markets and New Cardiovascular & Metabolic Diseases (CVMD) and Japan performed well in the quarter. Respiratory and New Oncology remained flat in the reported quarter.

Quarter in Detail

Product sales declined 12% in the quarter to $4.84 billion, while externalization revenues inched up 3% to $562 million. Loss of exclusivity for Crestor, lower Symbicort sales, and lack of FluMist sales (due to the U.S. Centers for Disease Control's recommendation to not use FluMist this season) hurt the top line in the quarter.

Symbicort sales were down 8% in the quarter due to pricing headwinds in the U.S. and competitive dynamics in Europe.

U.S. sales plummeted 34% to $1.49 billion, primarily due to the entry of generic versions of Crestor and Seroquel XR in the U.S. European markets witnessed a 3% decline in sales to $1.13 billion due to generic competition. Revenues from Emerging Markets were, however, up 9% to $1.56 billion in the reported quarter due to strong growth in China (up 7% to $782 million).

Nexium recorded sales of $461 million (up 1%), with the U.S. contributing $136 million (up 4%) and Europe accounting for $61 million (up 3%). However, Crestor sales declined 44% to $631 million, with the U.S. accounting for $112 million (down 82%) and Europe contributing $195 million (down 4%). U.S. sales declined sharply in the 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 25% to $207 million), Daliresp/Daxas (up 42% to $44 million), Pulmicort (up 14% to $337 million), Faslodex (up 13% to $214 million), Lynparza (up 32% to $57 million), Duaklir (up 54% to $19 million) and Seloken/Toprol-XL (up 3% to $186 million). Recently launched Tagrisso recorded sales of $171 million, up 16.3% sequentially. The upside was driven by strong U.S. sales due to strong patient demand trends and successful commercial launches across multiple markets. Another new medicine, Movantik/Moventig, recorded 76% higher sales in the quarter to $30 million.

Brilinta/Brilique sales were $224 million in the reported quarter, up 27% year over year. Brilinta maintained its leadership position in the U.S. branded oral anti-platelet market. Sales, however, were down almost 5.1% sequentially. In Europe and China, Brilinta continued to display an impressive performance.

Other Details

AstraZeneca’s core gross margin was up by 50 basis points (bps) to 83.6%. Core selling, general and administrative (SG&A) expenses decreased 12% to $1.83 billion due to the company’s cost-control initiatives.

During the quarter, core research and development (R&D) expenses decreased 3% at $1.34 billion.

2017 Outlook

AstraZeneca continues to expect total revenue to decline in the low-to-mid single-digit percentage range in 2017. The company also maintained its guidance for core earnings in 2017 which 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 adversely impact the top line in a low single-digit percentage but minimally impact core EPS.

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 owing to 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 #3 (Hold). Some better-ranked stocks in the health care sector are Heska Corporation , Galena Biopharma, Inc. and Aeglea Biotherapeutics, Inc. . Each of these stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Heska’s earnings per share estimates increased from $1.53 to $1.65 for 2017 and from $1.80 to $2.01 for 2018, over the last 60 days. The company posted positive surprises in three of the four trailing quarters with an average beat of 291.54%.

Galena’s loss per share estimates narrowed from $2.03 to 58 cents for 2017, over the last 60 days. The company posted positive earnings surprises in two of the four trailing quarters with an average beat of 53.83%.

Aeglea’s loss per share estimates narrowed from $3.64 to $2.48 for 2017 over the last 30 days. The company’s shares gained 61.1% so far this year.

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