AstraZeneca plc (AZN): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

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Summary:
AstraZeneca's first-quarter 2014 core earnings of $1.17 per ADS missed the Zacks Consensus Estimate of $1.20. Earnings were also down 11% (at CER) year over year. AstraZeneca's quarterly revenues increased 3% (at CER) year over year to $6.4 billion. Revenues were above the Zacks Consensus Estimate of $6.3 billion. AstraZeneca continues to expect 2014 revenues to decline in the low-to-mid single digits and core earnings to decline in the teens. We expect the top- and bottom-line to remain under pressure as Nexium goes off-patent in May 2014. We are nonetheless pleased with recent approvals (Forxiga and Myalept in the U.S. and Xigduo in the EU) at AstraZeneca. We are also positive on AstraZeneca's efforts to advance its pipeline. We maintain a Neutral recommendation on the stock.

Overview:

AstraZeneca plc, headquartered in London, UK, is one of the largest biopharmaceutical companies in the world. AstraZeneca was formed on Apr 6, 1999 through the merger of Sweden's Astra AB and UK's Zeneca Group plc. AstraZeneca's business can be broken down into separate lines based on therapeutic classes. These include: gastrointestinal, cardiovascular, respiratory, oncology, neuroscience, infection and other. The company's key products include Crestor (cholesterol management: $5.6 billion sales in 2013) Nexium (acid reflux management: $3.9 billion sales in 2013) Symbicort (asthma: $3.5 billion sales in 2013) Seroquel (schizophrenia and bipolar mania: $1.7 billion sales in 2013) Zoladex (prostate and breast cancer: $996 million sales in 2013) and Atacand (hypertension and symptomatic heart failure: $611 million sales in 2013). However, several of these key products are facing generic competition.

In 2013, U.S. sales declined 9% (at constant exchange rates [CER]), primarily hurt by the loss of exclusivity of several key products including Seroquel. Strong performance by Symbicort, Faslodex, and Onglyza partially offset the decline in revenues.

2013 sales in Europe were down 9% (CER) due to generic competition (Nexium, Arimidex, Seroquel IR and Merrem). Established ROW sales were down 10% to approximately $4.0 billion. Sales in emerging markets climbed 8% to $5.4 billion.

In Jun 2007, AstraZeneca acquired biotechnology company MedImmune for $15.6 billion thus strengthening its product portfolio further. In Aug 2011, AstraZeneca sold its Astra Tech business to DENTSPLY for about $1.8 billion in cash. In a bid to add late-stage candidates to its pipeline, AstraZeneca entered into a number of acquisition deals (Bristol-Myers diabetes portfolio, Pearl Therapeutics and Omthera Pharmaceuticals) in the last few quarters and agreements with companies such as FibroGen, Inc.

2013 Revenues by Disease Category

Geographical Break-Up of 2013 Revenues


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



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