Eyes Down For AstraZeneca plc Results

astrazenecaWe haven’t had any results from AstraZeneca (LSE: AZN) (NYSE: AZN.US) since the failed takeover bid to see how things are going, but there will be many eyes, including Pfizer‘s no doubt, focused on first-half figures when we get them on Thursday 31 July.

The City is still forecasting a 15% drop in earnings per share (EPS) for the full year to December, but AstraZeneca has given us tantalising hints that a return to profit growth might actually happen before 2016 as many observers expect.

No surprises

At year-end 2013, the company did say that “Core EPS for 2014 is expected to decline in the teens at CER“, and that fits in with predictions, but we also heard that it “expects revenues in 2017 will be broadly in line with 2013“. That would amount to a healthy reversal after 2013 ended with a 6% fall in revenue to $25.7bn and a 23% drop in core EPS.

Revenues are down largely due to recent loss of some patent protections and increased competition from generic drugs, so a renewed development pipeline is clearly the priority right now — as it has been since Pascal Soriot took over the top job.

Pipeline progress

And it appears to be bearing fruit, as the firm’s first-quarter update released in April told us of “significant progress made towards achieving scientific leadership in core therapeutic areas“.

The company says it is making impressively good progress with a large number of things with very strange names, including the start of Phase III trials for cancer drug Olaparib and arthritis treatment Brodalumab. And four other programmes are advancing to Phase III.

With revenue for the quarter actually up 3% at constant exchange rates, Mr Soriot said that “revenue growth reflects the increasing contribution from the five growth platforms that showed strong performance“.

Tricky valuation

Looking at AstraZeneca’s share price, it’s clearly still buoyed by the Pfizer effect. It soared and stayed close to the £50 level while a takeover was looking like a serious possibility, but since the attempt was called off the shares have not retreated to pre-bid levels. At £44.25 now, the price is still up 33% over 12 months and that puts the shares on a forward P/E of 17.5.

But long-term investors should be ignoring that and evaluating AstraZeneca on its own fundamental performance — and I’m optimistic about the forthcoming H1 update.

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Alan Oscroft has no position in any shares mentioned. The Motley Fool has no position in any of the shares mentioned.