AstraZeneca smashes estimates -Q3 earnings

AstraZeneca is a British-Swedish multinational biotechnology and pharmaceutical company. It released its third quarter earnings for FY21 before the U.K. market opened. Here is all you need to know about the latest disclosure.

  • Revenue: $9.86 billion vs $9.82 billion expected
  • EPS: $1.10 adjusted vs $0.63 expected

Financial Highlights

  • Total Revenue, comprising Product Sales and Collaboration Revenue, increased by 32% in the year to date to $25,406m. Total Revenue included $2,219m from the pandemic COVID-19 vaccine
  • Reported Gross Profit Margin in the year to date declined eleven percentage points to 68.8%; Core Gross Profit Margin declined six percentage points in the year to date to 74.1%. Reported Gross Profit Margin was also impacted by $1,044m due to the unwind of the fair value adjustment to Alexion inventories at the date of acquisition.
  • Reported Total Operating Expense increased in the year to date by 39% to $17,591m. Core Total Operating Expense increased by 24% to $13,649m and represented 54% of Total revenue
  • Reported R&D Expense increased in the year to date by 67% to $7,152m including an impairment charge of $1,172m recognised in the quarter on an intangible asset related to the acquisition of Ardea Biosciences, Inc. in 2012, following the decision to discontinue the development of verinurad. Core R&D Expense increased in the year to date by 34% to $5,591m with increases in both Reported and Core R&D
  • Reported SG&A Expense increased in the year to date by 25% to $10,117m and includes the increased amortisation of intangible assets related to the Alexion acquisition. Core SG&A Expense increased by 19% to $7,736m, reflecting the addition of Alexion SG&A expenses from 21 July 2021,
    investment in Oncology-medicine launches, the launch of several new BioPharmaceuticals medicines,
    particularly in the US, AstraZeneca’s further expansion in Emerging Markets, and the existing infrastructure
    base in China
  • Reported and Core Other Operating Income and Expense increased in the year to date by 51% to $1,345m and $1,346m respectively, and included $776m income from the divestment of AstraZeneca’s 26.7% share of Viela Bio, Inc. (Viela) in March 2021
  • The Reported Operating Profit Margin declined fourteen percentage points to 5.3%, reflecting the aforementioned intangible impairments and other factors. The Core Operating Profit Margin declined two percentage points in the year to date to 26.0% driven by the aforementioned increase in R&D and SG&A expenses
  • Reported EPS in the year to date declined 80% to $0.33. Core EPS increased by 22% to $3.59. Reported and Core EPS were adversely affected by $0.03 due to the pandemic COVID-19 vaccine

CEO’s Statement

“AstraZeneca’s scientific leadership continues to provide strong revenue growth and exceptional pipeline delivery, with eight positive late-stage readouts across seven medicines since June, including our long acting antibody combination showing promise in both prevention and treatment of COVID-19. The addition of Alexion furthers our commitment to bring transformative therapies to patients around the world, and I am proud of our colleagues’ ongoing dedication and focus. Our broad portfolio of medicines and diversified geographic exposure provides a robust platform for long-term sustainable growth. Following accelerated investment in upcoming launches after positive data flow, we expect a solid finish to the year and our earnings guidance is unchanged.”

– said Pascal Soriot, Chief Executive Officer, AstraZeneca

Analysts Estimate

The Zacks Consensus Estimate for earnings per share (EPS) for the third quarter was pegged at $0.63. This indicated an increase of 34% year-over-year. In addition, it also suggested a growth of 40% quarter-over-quarter. The estimated earnings per share was revised from $0.66 to $0.63 a week ago.

The Earnings Expected Surprise Prediction stood at -2.66% which means that the consensus didn’t expect AstraZeneca to meet its estimates.

The estimated revenue was pinned at $9.82 billion. This indicated an increase of 49.3% than that of previous year. Also, it indicated a modest growth of 19.75% from that of the last quarter.

Earnings History

The Covid-19 pandemic that induced economic downturn almost all over the globe was actually a boon to the company. AstraZeneca had delivered strong revenue growth of 23% in the first half (H1) to $15.5 billion. Additionally, in the second quarter, revenue increased by 31% to $8.2 billion. Excluding the contribution from the pandemic induced COVID-19 vaccine, revenue increased by 14% in H1 to $14.3 billion. Additionally, it rose by 17% in the second quarter to $7.32 billion.

The Key Highlights of the first half results included:

  • An increase in Product Sales of 24% to $15.3 billion. New medicines8’s total revenue improved by 31% in the half to $8.3 billion, including growth in Emerging Markets of 35% to $1.89 billion. Globally, new medicines represented 54% of Total Revenue (H1 2020: 50%)
  • Oncology growth of 19% to $6.36 billion and an increase in New CVRM9 of 21% to $2.37 billion. Similarly, Respiratory & Immunology (R&I) increased by 11% to $2.97 billion, despite the adverse impact of mature, inhaled respiratory medicines on the performance in the half
  • An increase in Emerging Markets of 26% to $5.45 billion with the performance benefiting from sales of the pandemic COVID-19 vaccine of $455 million. China’s market growth of 21% to $3.2 billion. In the US, Total Revenue increased by 16% to $4.83 billion and in Europe by 33% to $3.2 billion, also benefiting from sales of the pandemic COVID-19 vaccine of $572 million.
Future Earnings Forecast

Analysts estimate the earnings per share of AstraZeneca for the fourth quarter of FY21 to be $0.74. This indicates modest growth of 37% from that of the previous year. The estimated revenue for the quarter is pinned at $10.96 billion. This indicates a strong growth of 47.8% year-over-year.

The Annual Forecast for FY21 estimates the earnings per share for the year to be $2.64. It indicates a modest increase of 31.3% year-over-year. The estimated total revenue for the year stands at $36.04 billion. This indicates a modest growth of 35.4% from that of the last year.

Stock Performance

The stock performance of the company has been stagnant lately. According to data released by NASDAQ, the stock price of AstraZeneca has ranged from $62 to $63 in the past 5 days. There have been various instances of decline and hardly did the price soar. In the last 24 hours, the stocks are down by 0.22%, the magnitude is less. However, if the stagnant growth of stock prices is considered then this ‘mere’ decline is also a matter of concern. Zacks ranks its stocks at #5 which means “Strong Sell” which indicates that the annual returns of the stocks is approximately 3.04%.

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