) recently announced that it has completed the sale of Aptium
Oncology assets. Aptium Oncology was a subsidiary of AstraZeneca
which offered outpatient management and consulting services to
cancer patients in the US. Aptium Oncology was affiliated to five
hospitals in California, Florida, New Jersey and New York, and had
a network of over 100 oncologists.
AstraZeneca identified Aptium Oncology as a non-core business and
decided to divest the unit in order to focus on its core
businesses. AstraZeneca entered into agreements to sell its
interest in the Aptium cancer centers to respective hospitals. By
January 2012, the company had entered into agreements with four
hospitals. AstraZeneca will provide transitional support to each
cancer center during 2012.
AstraZeneca reported Aptium Oncology sales of $224 million, up 2%
from the year-ago number for the 12 months ending December 31,
2011. In 2012, the company recorded sales of $43 million until the
completion of the Aptium Oncology sale.
The sale of Aptium Oncology assets is not expected to have any
effect on the 2012 core earnings guidance range of $5.85 - $6.15
per share. The Zacks Consensus Estimate is pegged at $6.10 per
share, within the guidance range. AstraZeneca continues to expect a
decline in revenues in a low to mid-teens range compared with 2011
levels (at constant exchange rates).
Neutral on AstraZeneca
We are encouraged by AstraZeneca's focus on high-potential emerging
markets and are pleased with its effort to drive the bottom line
through cost-cutting initiatives and share buybacks.
However, we remain concerned about the generic competition faced by
the company's key products. In 2011, the company lost revenues
worth almost $2 billion to generic competition. The weak late-stage
pipeline coupled with the slow Brilinta uptake also bothers us.
We currently have a Neutral recommendation on AstraZeneca. The
stock carries a Zacks #3 Rank (Hold rating) in the short run.
ASTRAZENECA PLC (AZN): Free Stock Analysis
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