London-based pharma giant, AstraZeneca plc AZN has a strong product portfolio and is one of the key players in the global cardiovascular market.
AstraZeneca carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .
Here we discuss five key factors that indicate that the time is ripe to invest in the stock.
Rising Estimates & Share Price : AstraZeneca's earnings estimates for 2017 went up 2.8% while that for 2018 moved up 4.4% in the past 60 days. Its earnings performance has also been pretty impressive, with the company reporting positive surprises consistently. The average earnings beat over the last four quarters is 142.6%.
Shares of AstraZeneca have risen 26.7% this year so far, while the Zacks classified Large-Cap Pharma industry increased 11.4%. This comes after a decline of almost 20% in 2016.
New Drugs Going Strong: AstraZeneca's newly launched drugs are contributing to its top line, thereby easing the impact of genericization on legacy products. New drugs like Lynparza (ovarian cancer), Farxiga/Forxiga (type II diabetes) Movantik/Moventig (opioid-induced constipation) and Tagrisso (lung cancer) are off to an encouraging start. AstraZeneca is looking for further label expansions for these drugs.
Trends of better diagnosis, improved access and favorable patient dynamics should bode well for the company's established products across its portfolios. Meanwhile, the company is working on driving sales of Brilinta (cardiovascular) sales, which has been doing well. Brilinta enjoys a leading position in the U.S. branded oral anti-platelet market.
Deep Pipeline and Strategic Deals: AstraZeneca is also working on bolstering its pipeline and is looking at suitable acquisitions. In addition to acquisitions, the company is pursuing co-development deals with companies like Nektar Therapeutics NKTR , Eli Lilly & Company LLY , Ionis, Allergan plc AGN , Merck and Valeant to boost its pipeline.
This year, the company expects to launch four new products - Imfinzi/durvalumab (multiple cancers, approved in the U.S. for urothelial carcinoma), Qtern (saxagliptin/Forxiga fixed combination; approved in the U.S & EU.), Bevespi (already launched) and benralizumab (asthma; under review in the U.S).
AstraZeneca has a promising and diversified late-stage pipeline that includes immuno-oncology candidates. Immuno-oncology is a therapeutic area, which is presently attracting a lot of interest and represents huge commercial potential. The company's target is to launch at least six new oncology medicines by 2020 with three already launched since 2014.
An interesting candidate in the company's immuno-oncology pipeline is Imfinzi (durvalumab). It is being evaluated for multiple cancers (either alone or in combination with other regimens), including phase III trials in first-line urothelial cancer, non-small cell lung cancer, small cell lung cancer and head and neck squamous cell carcinoma among others
Other promising candidates in late-stage development or under regulatory review include ZS-9 (hyperkalemia), roxadustat (anemia in patients with chronic kidney disease) and AZD3293 (Alzheimer's disease).
News Rich Year So Far: This year so far has been news rich for AstraZeneca. In May, it received positive CHMP opinion for plaque psoriasis candidate, brodalumab; gained the first approval for Imfinzi (durvalumab) for urothelial carcinoma and announced positive lung cancer data from late-stage studies. In April, its EGFR inhibitor Tagrisso's conditional approval was converted to full approval in both the U.S. and EU,
In March, it announced positive Lynpraza data from a phase III study evaluating the drug as a maintenance monotherapy in patients with germline BRCA-mutated (gBRCA), platinum-sensitive, relapsed ovarian cancer. Later, in the same month, the regulatory application for label expansion for the maintenance indication was also granted priority review by the FDA. In February, AstraZeneca gained FDA approval for Qtern (diabetes) and also presented positive breast cancer data on Lynpraza.
The company expects a lot of activity on the regulatory and pipeline front through the rest of the year including U.S. regulatory decisions for benralizumab and pivotal data for systemic lupus erythematosus candidate anifrolumab and for durvalumab from lung cancer studies.
If the decisions/data are positive, the share price uptick should continue.
Aggressive Cost Cutting Initiatives : AstraZeneca intends to drive operational efficiency and reduce the impact of genericization on its key products by trimming its cost structure. In 2016, SG&A cost declined 9% thanks to efficiency savings in sales and marketing operations as well as a reduction in general administration areas. These actions included a major reduction in the sales and head office structure in U.S. marketing. By the end of 2018, these restructuring initiatives are expected to generate net annualized benefits of about $1.1 billion. Streamlining operations, along with its focus on R&D, will benefit the company in the long run.
Many key drugs in AstraZeneca's portfolio are facing generic competition in the U.S. Its diabetes franchise also facing stiff competition. Nonetheless, we believe that its new drugs, cost-cutting initiatives, rapid pipeline progress, and accretive deals/acquisitions will keep the stock afloat this year.
Astrazeneca PLC Price and Consensus
Astrazeneca PLC Price and Consensus | Astrazeneca PLC Quote
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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Astrazeneca PLC (AZN): Free Stock Analysis Report Eli Lilly and Company (LLY): Free Stock Analysis Report Allergan PLC. (AGN): Free Stock Analysis Report Nektar Therapeutics (NKTR): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research