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Will half-year results lift AstraZeneca share price?

AstraZeneca share price: AstraZeneca logo with syringe and vial

The AstraZeneca [AZN] share price has had its wobbles over the last 12 months, despite being one of the first pharmaceutical giants to develop a Covid-19 vaccine.

Concerns over the safety of the Covid-19 vaccine and its roll-out in Europe have largely been offset by a successful UK vaccination programme. While the company continues to help fight against the coronavirus pandemic around the globe, attention is increasingly turning to other drug opportunities in AstraZeneca’s pipeline.

The company is set to release second quarter and first-half figures at 7am on 29 July. Will the latest numbers keep the AstraZeneca share price healthy?

AstraZeneca share price gets a vaccine boost

The AstraZeneca share price stood at 7,304.84p at the close on 2 January 2020 but soon received a shot in the arm after it announced an agreement with Oxford University to develop a vaccine against the Covid-19 virus on 30 April last year. The positive news sent the AstraZeneca share price up to 8,700p at the close on 28 July 2020. 

By November 2020, AstraZeneca announced that the vaccine produced a strong immune response to Covid-19, and unlike other vaccines, it could be stored at normal refrigerator temperatures of between 2 and 8ºC. It sealed production deals with the UK and US governments as well as international vaccine organisations to make billions of doses available to low- and middle-income nations, often costing less than $5 a dose.

However, the AstraZeneca share price failed to keep up its momentum after it halted vaccine trials on health fears and produced confusing data over its efficacy. Its shares fell back to 7,324p at the close on 31 December, making for a 0.9% annual fall.

Despite a relatively successful UK vaccine rollout, which has largely led to the re-opening of the country since 19 July, health concerns around blood clots and a supply chain squeeze in Europe continued to leave the AstraZeneca share price poorly. It stood at 6,794p at the close on 3 March 2021, down 5.4% in the year to date. 

AstraZeneca’s overall drug sales also slowed in the second and third quarters as fewer trips to hospitals during the pandemic squeezed demand.

Will AstraZeneca’s Alexion acquisition send revenues soaring?

The AstraZeneca share price has bounced back in recent weeks, soaring to 8,759p at the close on 13 July. It was boosted by a 15% climb in first-quarter revenues to $7.32bn. When taking Covid-19 vaccine revenues out of the picture, the numbers still looked strong – up 11% thanks to renewed demand for existing and new oncology and heart drugs. The success of its Covid-19 vaccine against deadly new variants has also restored confidence in investors and traders.

But the main driver in the AstraZeneca share price surge, despite some concerns over the price, was the completion of its $39bn purchase of rare disease specialist Alexion Pharmaceuticals in July of this year. Analysts said the deal would bring an immediate $6bn revenue boost from Alexion’s C5 inhibitors Soliris and Ultomiris.

AstraZeneca hopes Alexion’s sales will jump 9% a year to help it meet its $40bn annual sales goal by 2023 – approaching double the $25.8bn it achieved in sales in 2020.

SVB Leerink analysts believe there could be “room for higher revenue from Alexion’s portfolio under AZ’s wing,” helped by neurological drug growth in the US and more demand from China, according to FiercePharma.

The AstraZeneca share price stood at 8,292p at the close on 26 July, up 15.4% in the year to date. 

AstraZeneca’s first-half expectations

Investors and traders will be keen to find out any more details regarding the Alexion deal, with Naresh Chouhan, an analyst at Intron Health, expecting the deal to increase the company’s earnings over the next four years, according to Forbes.

Comments on the global roll-out of the Covid-19 vaccine, health concerns and the performance of its cancer and heart drugs will also be in focus. 

UBS analysts expect the AstraZeneca share price to boost its full-year earnings guidance by circa $0.40 to its forecasts, which stood between $4.75 and $5 after the Alexion deal. UBS believes that the agreement has boosted confidence in its “growth profile”. 

The AstraZeneca share price received a reputational and financial boost from the Covid-19 vaccine, but the company’s expansion into growing ailments such as heart conditions, diabetes, and now rare diseases could be the confidence boost traders and investors are looking for. 

Sources
https://fortune.com/2020/12/14/shareholders-adverse-reaction-astrazenecas-alexion-deal
https://www.proactiveinvestors.co.uk/companies/news/954938


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