The share price of the FTSE 100‘s largest company — AstraZeneca (LSE: AZN) — fell 3.7% today (29 April). This came after the pharma behemoth reported its Q1 results.
What didn’t investors like? Let’s take a look.
A miss on the top line
AstraZeneca’s year-on-year revenue rose 7.2% — or 10% at constant exchange rates (CER) — to $13.6bn. Its oncology segment, accounting for 42% of sales, grew 10% (13% CER) to $5.6bn, driven by strong performances from drugs Imfinzi (lung and bladder cancer) and Enhertu (breast and lung cancer).
While this appears to be solid stuff, analysts had expected the top-line figure to be $13.8bn. So, there was a revenue miss, albeit a small one. As a shareholder myself, I’m not particularly worried about this.
The firm did report core earnings per share (EPS) of $2.49, beating estimates of $2.27. That represented a 21% rise, but there were some one-off tax benefits in there.
CEO Pascal Soriot commented: “Our strong growth momentum has continued into 2025 and we have now entered an unprecedented catalyst-rich period for our company. Already this year we have announced five positive Phase III study readouts…Overall, we are making excellent progress toward our ambition of $80bn in total revenue by 2030.”
Tariffs and China
AstraZeneca addressed two things that have been hanging over it: the potential impact of US tariffs and issues in China.
On tariffs, it remains committed to investing and growing in the US, where it already has 11 production sites across small molecules, biologics, and cell therapy, as well as two large R&D sites.
AstraZeneca says the vast majority of its medicines sold in the US are made domestically. Yet it’s looking to transfer more manufacturing stateside.
As such, if pharma tariffs are in line with other sectors, the company’s guidance for 2025 will remain in the range it has already set out. That is for revenue to increase by a high single-digit percentage and core EPS to rise by low double digits.
Of course, the risk is that we don’t know what the tariffs on the pharmaceutical industry will end up being. We also don’t know what plans the Trump administration has for the sector in general and drug prices in particular.
However, AstraZeneca is keen to emphasise its resilience, saying its dual supply chains in China and the US are “largely segregated“. The firm is also increasing its presence in China by building a new R&D facility in Beijing.
In relation to potential unpaid duties on Enhertu imports in China, it said it may have to pay a fine of up to $8m if found liable. Again, I’m not worried about this, based on what we know.
Worth a look
The stock is now trading at 15.8 times forward earnings. I don’t think that’s a high price to pay for a quality growth firm like this, especially when there’s a 2.4% dividend yield added to the mix.
Looking at the share price targets, analysts also seem bullish. The average one-year target is 13,560p, which is 33% higher than the current price, while 24 out of 32 analysts rate the stock as a Strong Buy.
After a 23% fall since September, I think the stock now looks attractive and is definitely worth considering.
