Eyes Down For AstraZeneca plc’s Results

A preview of AstraZeneca plc (LON:AZN)’s upcoming half-year results.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

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.

This exclusive report is available to private investors for a limited time only, but you can download it right now: simply click here.

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

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

More on Investing Articles

Investing Articles

Are these the best stocks to buy on the FTSE right now?

With the UK stock market on the way to hitting new highs, this Fool is considering which are the best…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Can the Centrica dividend keep on growing?

Christopher Ruane considers some positive factors that might see continued growth in the Centrica dividend -- as well as some…

Read more »

Smiling family of four enjoying breakfast at sunrise while camping
Investing Articles

How I’d turn my £12,000 of savings into passive income of £1,275 a month

This Fool is considering a strategy that he believes can help him achieve a stable passive income stream with a…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

2 top FTSE 250 investment trusts trading at attractive discounts!

This pair of discounted FTSE 250 trusts appear to be on sale right now. Here's why I'd scoop up their…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

3 things that could push the Lloyds share price to 60p and beyond

The Lloyds share price has broken through 50p. Next step 60p? And then what? Here are some thoughts on what…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

£1,000 in Rolls-Royce shares a year ago would be worth this much now

Rolls-Royce shares have posted one of the best stock market gains of the past 12 months. But what might the…

Read more »

Investing Articles

Are HSBC shares a FTSE bargain? Here’s what the charts say!

There are plenty of dirt-cheap FTSE 100 banking stocks for investors to choose from today. Our writer Royston Wild believes…

Read more »

Three signposts pointing in different directions, with 'Buy' 'Sell' and 'Hold' on
Investing Articles

Just released: Share Advisor’s latest ‘Hold’ recommendation [PREMIUM PICKS]

In our Share Advisor newsletter service, we provide buy, sell, and hold guidance for our universe of recommendations.

Read more »