AstraZeneca (LSE:AZN) shares have gone from strength to strength over the past year. In fact, they’re up 31%. That’s pretty sizeable for a company with a market cap of £164bn.
But shares in the Anglo-Swedish pharma/biotech giant fell on Friday, despite boosting its outlook in its quarterly update.
So, let’s take a closer look at the earnings reports and see whether AstraZeneca stock is right for my portfolio!
Guidance boosted
On Friday, AstraZeneca upped its sales guidance on an increase in prescriptions of its Evusheld injection to protect against Covid-19. The firm said that total revenues were now expected to increase by “a low twenties percentage“, up from previous estimates in the “high teens“.
The pharma giant said that it expects increasing sales of Evusheld — an antibody-based Covid-19 treatment — to offset a decline in sales of its vaccine Vaxzevria — the name given to the Covid-19 vaccine developed in tandem with the University of Oxford.
Revenue for the quarter ending June 30 came in at the top of analysts expectations. Core earnings came in at $1.72 per share for the three months, with revenue hitting $10.8bn. Analysts were expecting profit of $1.56 per share.
Meanwhile, product sales were up 41% at $21.6bn and collaboration revenues came to $551m for the six months to June 30. Oncology was a big growth area. The firm saw a 22% increase in revenue from the segment including a substantial milestone payment.
AstraZeneca said gross margins came in at 81% in the half. The report also highlighted that second quarter performance benefitted from currency fluctuations and the phasing of Covid-19 medicine contracts.
AstraZeneca also declared an interim dividend of $0.93 per share.
Would I buy AstraZeneca shares?
AstraZeneca’s share price has been going from strength to strength, and there’s reasons for that beyond the headline data.
The company has a sizeable pipeline, with 184 projects in development right now. By comparison, Pfizer only has 104. More broadly, AstraZeneca’s pipeline is considered more promising than the other large European pharma companies.
The company has also been focusing on acquisitions to fund growth. The purchase of Alexion for $39bn might have pushed up debt — which now totals around $25bn — but it has enhanced AstraZeneca’s portfolio and capacity to address more life-threatening diseases.
AstraZeneca, although an established firm, is very much in a period of growth. There has also been a slew of of positive clinical trial results for several of its ongoing projects. Perhaps most positively is its phase 3 breast cancer treatment, Enhertu. The drug achieved 49% reduction in disease progression versus traditional chemotherapy.
Obviously there are considerable risks in pharma and biotech, as companies can spend billions developing drugs that don’t necessarily work or reach the market. However, I feel AstraZeneca’s broad portfolio offsets some of that risk.
So, despite trading near an all-time high, I’d buy AstraZeneca shares at the current price. The dividend isn’t great, but this blue-chip stock still has great growth potential.
