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Eyes Down For AstraZeneca plc’s Results

Blue-chip drugs company AstraZeneca (LSE: AZN) (NYSE: AZN.US) is due to announce its half-year results on Thursday next week (1 August).

At the time of writing, the shares of this FTSE 100 Anglo-Swedish group are trading at 3,290p, up pretty much in line with the Footsie’s 6% rise over the last six months.

How will AstraZeneca’s business have performed in the first half compared with last year’s first half? And will the company be on track to meet analyst consensus forecasts for this year’s key full-year numbers? Here’s your cut-out-and-check results table!

  H1 2012 FY 2012 H1 2013 Forecast
FY 2013
Forecast
FY growth
Revenue $14.01bn $27.97bn ? $26.11bn -6.6%
Core earnings per share (EPS) $3.34 $6.41 ? $5.26 -17.9%
Dividend per share $0.90 $2.80 ? $2.84 +1.4%

Expiring patents continue to dog AstraZeneca. Management laid out its expectations for 2013 within its results for 2012, and repeated those expectations within this year’s first-quarter report:

“The Company continues to expect a mid-to-high single digit decline in revenue at CER [constant exchange rates] and a Core EPS decline that is significantly larger than the decline in revenue for the full year.”

Revenue

City analysts have pencilled in revenue of $26.11bn for the full year, down 6.6% from 2012’s $27.97bn — consistent with the company’s guidance.

Revenue for this year’s first quarter was $6.39bn, 12% lower than for the same period last year. According to Yahoo Finance, the analyst consensus for Q2 is $6.26bn, down 6% on last year. That gives total forecast revenue for H1 of $12.65bn — a bit less than 10% below H1 2012.

Earnings

After a 9% drop in core EPS from 2011 to 2012, City analysts see EPS plunging 18% during 2013 to $5.26 from last year’s $6.41. The consensus earnings forecast is consistent with the company’s guidance of an EPS fall “significantly larger” than the expected mid-to-high single-digit decline in revenue.

EPS for this year’s Q1 came in at $1.41, 21% lower than for the same period last year. There are some differences between data providers on the Q2 consensus earnings forecast. The provider with the lowest consensus has EPS at $1.03, and the provider with the highest puts EPS at $1.21.

Depending on which consensus you use, H1 forecast EPS comes out at between $2.44 and $2.62. I think we can assume that a number outside that range would be quite a big shock to the market!

Dividend

This time last year AstraZeneca’s board declared a half-year dividend of $0.90 reflecting a new intention to set the half-year payout “at around a third of the prior year dividend”. $0.90 was around a third of 2011’s full-year $2.80 dividend; an exact third would have been $0.93. When it came to the full year, the board held the 2012 dividend at $2.80.

Given the company’s continuing revenue and earnings woes, and the need for cash to make acquisitions, I suspect the dividend will be held at the same level again this year. I’m expecting to see another $0.90 half-year payout recommended within next week’s results.

However, the analyst consensus is for the full-year dividend to edge up 1.4% to $2.84. I reckon that reflects a split between one camp of analysts expecting a held dividend and another expecting an increase of something above 1.4%. They can’t both be right!

Finally, I can tell you that one of the UK’s most successful investors has backed AstraZeneca to the hilt. City supremo Neil Woodford has made the company one of his biggest holdings with a high-conviction weighting of 9%.

If you’re interested in discovering Woodford’s other big blue-chip bets and gaining a valuable insight into his enormously successful approach to investing, I recommend you download this free Motley Fool report.

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> G A Chester does not own any shares mentioned in this article.