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Obesity Drug Gives AstraZeneca Shares Shot In The Arm
AstraZeneca posted an upbeat set of third quarter results, with strong cancer drug sales making up for declining revenues from Covid-19 related medicines. After currency fluctuations, total revenue rose 5% to $11 billion in the third quarter. This was despite a $2.8 billion fall in Covid-19 product sales.
Stripping out sales of Covid-19 products, revenues rose by an encouraging 13% over the period – up 15% over nine months. Revenues from oncology products also increased by 20% in the third quarter, while sales from its rare disease portfolio also increased by 12%. Meanwhile, operating profits rose by 4% to $2 billion during the period.
"Our company continued its strong growth trajectory in the third quarter with total revenue from our non‑Covid-19 medicines up 13% compared to last year," said chief executive officer Pascal Soriot. "We initiated several Phase III trials of high-potential molecules this quarter, including for volrustomig, our PD-1/CTLA-41 bispecific antibody. Our portfolio of bispecifics [a new type of antibody treatment] has the potential to replace the first-generation checkpoint inhibitors across a range of cancers."
The shares rose 3% on Thursday.
AstraZeneca buys early stage obesity drugThe drug giant has also seen encouraging data from fixed dose combination trials of its product zibotentan with Farxiga which, the company says, could improve treatment outcomes for kidney disease patients. Meanwhile, Soriot also says that the company's new obesity drug ECC5004 has the potential to help a billion people suffering from cardiometabolic diseases including type-2 diabetes, "both a monotherapy and in combinations."
Diabetes patients typically take a cocktail of medicines to control the disease. AstraZeneca has just purchased the full rights to the product from Chinese company Eccogene in every worldwide territory but China, where the two companies will partner on distribution. The product is in the same class of medicines as Novo Nordisk's obesity drug Wevgovy but is in early stage trials. Wevgovy is a blockbuster and made around $1.4 billion in sales between July and September 2023 alone.
Phase I trials of AstraZeneca's once-a-day product have so far shown encouraging weight loss compared to the placebo and good tolerability.
AstraZeneca raises its earnings guidanceOn another positive note, Soriot told investors that "given the momentum in the year to date," AstraZeneca is increasing its full-year revenue guidance. At constant currency rates, total sales for the full-year 2023 – stripping out Covid-19 medicines – are now forecast to increase by a "low-teens percentage". Meanwhile, core earnings per share (EPS) is now expected to rise by a low double-digit to low teens percentage at constant currency rates.
In September, analysts at broker Morgan Stanley increased their price target on the shares to £129 from £127.
The shares are down 10% this year to £100.90 and are trading off their three year highs. As such, they are worth watching as the pharmaceutical sector remains a decent port in the current stock market storm.
Past performance is not a guide to future performance.
Industry Comparison: Evaluating AstraZeneca Against Competitors In Pharmaceuticals Industry
In the ever-changing and fiercely competitive business landscape, conducting thorough company analysis is crucial for investors and industry experts. In this article, we will undertake a comprehensive industry comparison, evaluating AstraZeneca AZN and its primary competitors in the Pharmaceuticals industry. By closely examining key financial metrics, market position, and growth prospects, our aim is to provide valuable insights for investors and shed light on company's performance within the industry.
AstraZeneca BackgroundA merger between Astra of Sweden and Zeneca Group of the United Kingdom formed AstraZeneca in 1999. The firm sells branded drugs across several major therapeutic classes, including gastrointestinal, diabetes, cardiovascular, respiratory, cancer, immunology and rare diseases. The majority of sales come from international markets with the United States representing close to one third of its revenue.
Company P/E P/B P/S ROE EBITDA (in billions) Gross Profit (in billions) Revenue Growth AstraZeneca PLC 34.13 5.38 4.47 3.68% $3.33 $9.4 4.64% Eli Lilly and Co 108.89 50.86 16.93 -0.52% $0.96 $7.64 36.84% Novo Nordisk A/S 43.12 34.59 15.15 24.5% $32.76 $49.02 28.89% Johnson & Johnson 28.61 5.15 4.04 35.56% $7.24 $14.74 6.78% Merck & Co Inc 56.59 6.26 4.38 11.87% $6.95 $11.7 6.71% Novartis AG 25.42 5.29 3.82 3.91% $4.88 $8.97 12.14% Pfizer Inc 16.67 1.78 2.55 -2.43% $-1.1 $3.96 -41.55% Bristol-Myers Squibb Co 12.63 3.49 2.33 6.32% $4.85 $8.46 -2.25% Zoetis Inc 36.70 16.29 9.99 12.28% $0.9 $1.51 7.44% GSK PLC 9.65 4.46 1.98 13.25% $2.55 $5.88 3.59% Takeda Pharmaceutical Co Ltd 34.63 0.93 1.59 -0.69% $202.28 $699.51 4.07% Dr Reddy's Laboratories Ltd 18.61 3.74 3.55 5.94% $23.28 $40.37 9.11% Viatris Inc 6.25 0.54 0.74 1.59% $1.22 $1.69 -3.34% Jazz Pharmaceuticals PLC 146.20 2.19 2.23 4.19% $0.33 $0.87 3.35% Amphastar Pharmaceuticals Inc 22.21 4.58 4.98 8.31% $0.09 $0.11 50.3% Corcept Therapeutics Inc 31.66 5.66 6.37 7.06% $0.03 $0.12 21.5% Average 39.86 9.72 5.38 8.74% $19.15 $56.97 9.57%When closely examining AstraZeneca, the following trends emerge:
At 34.13, the stock's Price to Earnings ratio is 0.86x less than the industry average, suggesting favorable growth potential.
The current Price to Book ratio of 5.38, which is 0.55x the industry average, is substantially lower than the industry average, indicating potential undervaluation.
Based on its sales performance, the stock could be deemed undervalued with a Price to Sales ratio of 4.47, which is 0.83x the industry average.
The Return on Equity (ROE) of 3.68% is 5.06% below the industry average, suggesting potential inefficiency in utilizing equity to generate profits.
The Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $3.33 Billion is 0.17x below the industry average, suggesting potential lower profitability or financial challenges.
Compared to its industry, the company has lower gross profit of $9.4 Billion, which indicates 0.16x below the industry average, potentially indicating lower revenue after accounting for production costs.
The company's revenue growth of 4.64% is significantly lower compared to the industry average of 9.57%. This indicates a potential fall in the company's sales performance.
The debt-to-equity (D/E) ratio is a financial metric that helps determine the level of financial risk associated with a company's capital structure.
Considering the debt-to-equity ratio in industry comparisons allows for a concise evaluation of a company's financial health and risk profile, aiding in informed decision-making.
When comparing AstraZeneca with its top 4 peers based on the Debt-to-Equity ratio, the following insights can be observed:
When considering the debt-to-equity ratio, AstraZeneca exhibits a stronger financial position compared to its top 4 peers.
This indicates that the company has a favorable balance between debt and equity, with a lower debt-to-equity ratio of 0.77, which can be perceived as a positive aspect by investors.
AstraZeneca's low PE, PB, and PS ratios suggest that the company's stock is undervalued compared to its peers in the Pharmaceuticals industry. The low ROE indicates that AstraZeneca's profitability is relatively low compared to its peers. The low EBITDA suggests that the company's operating performance is weaker compared to its industry peers. The low gross profit and revenue growth indicate that AstraZeneca's financial performance and growth potential are lower compared to its industry peers.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
© 2023 Benzinga.Com. Benzinga does not provide investment advice. All rights reserved.
AstraZeneca Strikes A Deal For An Experimental Weight-Loss Drug And Boosts Its Guidance
Key TakeawaysAstraZeneca (AZN) announced a deal for an experimental weight-loss pill and raised its guidance on higher demand for its cancer treatments.
The Anglo-Swedish drug maker said it struck a licensing agreement with Shanghai-based Eccogene for its ECC504 once-daily oral treatment to reduce weight, which showed promise in a Phase 1 study. In addition, ECC504 is designed to treat type 2 diabetes and other cardiometabolic diseases.
AstraZeneca indicated Eccogene would receive an upfront payment of $185 million, and could get an additional $1.825 billion in future clinical, regulatory, and commercial milestones and tiered royalties on sales. The transaction gives AstraZeneca exclusive global developmental and commercialization rights to ECC504 except in China, where Eccogene has the right to work with AstraZeneca to produce the drug there.
The announcement came a day after Eli Lilly (LLY) received U.S. Regulatory approval for Zepbound, an injectable medicine to help people lose weight. The active ingredient in Zepbound, tirzepatide, had previously been approved to treat type 2 diabetes under the brand name Mounjaro. Market demand has been soaring for diabetes drugs such as Mounjaro and Novo Nordisk's (NVO) Ozempic and Wegovy that have shown to help patients shed pounds.
AstraZeneca also reported third quarter fiscal 2023 earnings per share (EPS) of $1.73, with revenue increasing 4% from a year ago to $11.49 billion. Both exceeded forecasts. The company noted that sales were held down by falling demand for its COVID-19 medicines.
AstraZeneca explained that because of its third quarter performance, it's raising its full-year guidance for revenue to a mid-single-digit percent gain, up from the previous low-to-mid-single digit percent. Excluding COVID-19 medicines, sales are expected to go up by a low-teens percent, as opposed to the earlier low-double-digit percent outlook. Core EPS is anticipated to be higher by low-double-digit to low-teens percent, compared to the earlier high-single-digit to low-double-digit percent estimate.
American depositary receipts of AstraZeneca rose over 2% in early trading Thursday following the news, but remained lower for the year.
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