What's in Store for AstraZeneca (AZN) This Earnings Season?

AstraZeneca plc AZN is scheduled to report second-quarter 2020 results on Jul 30.

The company’s earnings beat estimates in three of the past four quarters and missed the same once, with the average surprise being 6.11%.

Shares of AstraZeneca have gained 10.7% so far this year compared with the industry‘s increase of 2.2%.


In the last reported quarter, AstraZeneca delivered an earnings surprise of 12.77%.

Factors at Play

Sales of newer medicines, mainly cancer drugs Lynparza, Tagrisso and Imfinzi are expected to have benefited the company’s top line in the second quarter by offsetting lower sales of many other legacy medicines.

Product sales in the first quarter had benefited from stockpiling by distributors, prescription-lengthening and improved treatment-regimen adherence by patients as a result of the coronavirus pandemic. However, these benefits are likely to have been absent this time around.

Continued underlying demand growth and strong uptake in the first-line setting are likely to have pushed up sales of Tagrisso in the soon-to-be-reported quarter.

Sales of Lynparza, which is marketed in collaboration with Merck MRK, are likely to have been driven by expanded use in ovarian and breast cancer. In May, the FDA granted approval to Lynparza as treatment for HRR gene-mutated metastatic castration-resistant prostate cancer. The drug was also approved as first-line treatment for HRD-positive advanced ovarian cancer in the same month. These label expansions are likely to have contributed to the drug’s sales in the second quarter.

Second-quarter sales of Imfinzi are likely to have benefited from strong demand trends in the United States, especially in lung cancer indications.

AstraZeneca’s other major drugs like Fasenra, Brilinta and Farxiga are likely to have contributed to sales growth in the soon-to-be reported quarter.

However, please note that increased competition and formulary plan changes for competitors’ drugs had hurt sales of Farxiga in the United States in the first quarter. We expect these factors to have hurt sales in the second quarter as well.

Sales of AstraZeneca’s COPD drug Symbicort improved in the first quarter following the launch of an authorized generic version by AstraZeneca’s partner Prasco in the United States. The momentum is likely to have continued in the second quarter.

Sales of AstraZeneca’s major legacy drugs have been declining due to rising generic competition. The trend is likely to have continued in the second quarter.

Despite the coronavirus outbreak, the company did not see any material disruptions in its supply chain during first quarter. Its manufacturing facilities in China started operations within a few weeks of the outbreak. However, AstraZeneca, on its first-quarter earnings call, had warned that the economic consequences of the pandemic are uncertain. It plans to provide an updated guidance on its second-quarter earnings call.

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for AstraZeneca in this reporting cycle. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that is not the case here as you will see below.

Earnings ESP: AstraZeneca’s Earnings ESP is -1.73%. The Zacks Consensus Estimate is pegged at 43 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: AstraZeneca carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

AstraZeneca PLC Price and Consensus

AstraZeneca PLC Price and Consensus

AstraZeneca PLC price-consensus-chart | AstraZeneca PLC Quote

Stocks to Consider

Here are two pharma/biotech stocks that have the right combination of elements to beat on earnings this time around.

Pfizer Inc. PFE has an Earnings ESP of +1.04% and a Zacks Rank #3.

Incyte Corporation INCY has an Earnings ESP of +4.62% and a Zacks Rank #3.

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