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Earnings

AstraZeneca's share price: what to expect in half-year results

AstraZeneca's [AZN] share price has soared this year on strong first-quarter numbers and hopes of a coronavirus vaccine. So far in 2020, AstraZeneca's share price is up 13.6% (through 28 July’s close).

On 17 July, the stock rose to 9,255p in anticipation of trial results for the vaccine candidate AZD1222. While the results were good, news of possible side effects knocked shareholder confidence. This resulted in a sharp fall for AstraZeneca’s share price, which closed the following week at 8,652p. 

With second-quarter results around the quarter, could this dip signal time to buy for those seeking a post-earnings bounce?

 

 

When are AstraZeneca announcing earnings?

30 July

 

What could move AstraZeneca's share price post-earnings?

Coronavirus vaccine update

The prospect of a coronavirus vaccine is dominating international news at the moment, and AstraZeneca is working alongside a team at Oxford University to deliver its vaccine candidate AZD1222. Any further good news on its viability will be welcome in results, and could well see AstraZeneca's share price move higher.

That said, those favouring AstraZeneca's share price thinking the treatment will add to profit margins may have to think again according to Daniel Mahony, an investment manager specialising in healthcare at Polar Capital.

“I am still not convinced they are going to make a lot of money out of [a vaccine] or whether they even intend to. Say they provide 400 million doses to America and it is sold at $20 (£16) a dose, they would only be making $3 (£2.40) in profit per dose, if that,” Mahony told The Telegraph.

“I am still not convinced they are going to make a lot of money out of [a vaccine] or whether they even intend to. Say they provide 400 million doses to America and it is sold at $20 (£16) a dose, they would only be making $3 (£2.40) in profit per dose, if that” - Daniel Mahony,  Polar Capital investment manager

 

Mahony argues that investors buying into the stock in the hopes a vaccine will generate large sums of money are doing so for “the wrong reasons”. He points to the length of time it will take to develop the vaccine and that AstraZeneca doesn't want to be seen to be profiting from the outbreak.

 

Strong product pipeline

With all the discussion around a potential coronavirus vaccine, it's easy to forget the strength of the rest of the company’s treatment pipeline, and the good news this could bring for AstraZeneca&rsquo s share price. In first-quarter results, the pharmaceutical company delivered $6.3bn in revenue, up 17% from the same quarter last year on earnings of $0.59 per share — a 27% gain.

Much of this bottom-line growth came from AstraZeneca's new medicines, which saw a $1bn incremental gain year-on-year. Standout performers included lung cancer treatment Tagrisso and Farxiga for diabetes.

$6.3billion

AstraZeneca's Q1 revenue - a 17% YoY rise

Oncology is a primary focus for AstraZeneca, and is now responsible for 40% of sales. In first-quarter results, oncological product sales came in at $2.5bn, up 34% from the same quarter the previous year. Emerging markets are also worth keeping tabs on, bringing in $2.2bn in product sales last quarter, up 16% on the same quarter the previous year. AstraZeneca's share price could well jump if it once again shows strength across its range of treatments.

 

So, time to buy AstraZeneca?

Investors interested in AstraZeneca’s share price prospects should keep an eye on the company’s forward guidance in its H1 results. During Q1, the pharmaceutical company said it expected total revenue to increase by a “high single-digit to a low double-digit percentage for the full year”. Core earnings per share, meanwhile, were expected to increase by a “mid- to high-teens percentage”. Any news that this is still the case will further reinforce shareholder confidence. 

AstraZeneca has an 8,958.65p average price target from the analysts tracking the stock on the Financial Times. Hitting this would see a 2.97% upside on AstraZeneca’s share price through 28 July’s close.

Of the 27 offering recommendations, the majority rate AstraZeneca a Buy or Outperform. For income-seeking investors, AstraZeneca carries a 2.49% forward yield — a rare thing in these turbulent markets.

 

Market Cap£113.091bn
PE ratio (TTM)74.49
EPS (TTM)115.70
Quarterly Revenue Growth (YoY)15.7%

AstraZeneca share price vitals, Yahoo Finance, 29 July

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