Today (6 February) was good for shareholders of AstraZeneca (LSE: AZN). The FTSE 100‘s largest company vaulted 5.9% higher to 11,786p after dropping a strong set of earnings.
This helped push the Footsie up to 8,766, a record intraday high. Interest rates were also cut today, bringing down the cost of borrowing to 4.5%. So more gains could be ahead.
I added to my holding in the pharma giant in early November when the stock dipped under 10,000p. This followed news that some executives were under investigation in China, which I suspected might not matter five years from now. We also got news about that today.
Strong growth and surging profits
In 2024, AstraZeneca’s revenue jumped 21% year on year to $54.1bn on a constant currency basis. That was ahead of guidance for high-teens growth and better than what analysts were expecting ($53.1bn).
Sales growth was strong across the board, with its oncology (up 24%) and respiratory and immunology (24%) divisions leading the way. Cancer treatments account for around 41% of total sales.
Looking at regions, Europe (up 26% at constant exchange rates) and emerging markets excluding China (32%) grew the fastest. Yet its largest market, the US, recorded impressive 22% revenue growth last year.
On the bottom line, core earnings per share (EPS) spiked 19% to $8.21, ahead of forecasts ($8.15), while pre-tax profits surged 38% to $8.7bn.
CEO Pascal Soriot commented: “This year marks the beginning of an unprecedented, catalyst-rich period for our company, an important step on our Ambition 2030 journey to deliver $80bn total revenue by the end of the decade.”
While growth’s understandably expected to be slower in 2025, things still look solid. Revenue’s set to rise by a high single-digit percentage, with EPS increasing by a low double-digit percentage. It wouldn’t surprise me if those figures end up a bit higher this time next year.
Finally, the dividend was hiked 7% last year, though the forecast yield is just 2.2%.
Ocean-deep drugs pipeline
By my count, AstraZeneca had 14 blockbuster drugs in 2024, which means each one generated over $1bn in annual sales. But a handful of others are also getting closer.
One reason I’m a shareholder is the company’s deep pipeline of innovative treatments and potential future blockbusters. Last year, it delivered nine positive late-stage studies and anticipates another seven potential new medicines this year.
This gives the company many shots on goal, though naturally some will miss the target. Late-stage trial failures are an unavoidable risk here, as is adverse regulation. Donald Trump’s health secretary, the Big Pharma critic Robert F Kennedy, also remains a wildcard.
Meanwhile, a global trade war triggered by Trump’s tariffs might see AstraZeneca facing a bit more regulatory scrutiny in China. Speaking of which…
A drop in the ocean
What about China then? Well, this matter relates to unpaid importation taxes on two cancer drugs. But the good news is that the company sees the fine for this being between $900k and $4.5m.
While it’s obviously not ideal to be in the bad books with Chinse authorities, this amount is small potatoes for a global pharma giant.
As a shareholder, I’m happy with everything I’ve read here. But I’ll wait for another dip before buying any more shares.
