This Analyst Slightly Lowers AstraZeneca Forecast Amid Earnings Concerns, Although Still Bullish on Future Growth Potential

Thursday, AstraZeneca Plc AZN reported fourth-quarter 2023 sales of $12.02 billion, up 7% Y/Y (+8% at constant currency), slightly below the consensus of $12.09 billion, fueled by strong global demand growth for cancer drugs.

Excluding COVID-19 medicines, fourth quarter 2023 revenue increased by 16% to $12.04 billion.

The company reported a core EPS of $1.45, up 5% (+7% on constant currency), with earnings per ADS reached $0.72, missing the consensus of $0.79.

Also Read: AstraZeneca Bolsters Cell Therapy Pipeline With Over $1B Deal For China-Based Gracell Biotechnologies.

BMO Capital Markets is updating its model following the earnings and notes that the stock reaction on earnings was overdone. 

AZN’s earnings report has raised concerns about its growth outlook. Although the revenue exceeded expectations, there are questions about the sustainability of this performance, as it seems to be mainly driven by collaboration revenues. 

Additionally, the core EPS growth falling below consensus suggests that there may be lower operating leverage in 2024.

BMO Capital has slightly adjusted fiscal year 2024 sales forecasts, increasing them by 0.5%. Additionally, BMO Capital raised collaboration revenue based on AstraZeneca’s commentary, resulting in a projected approximately 12% year-over-year growth in overall revenue.

The revised lower target price of $80 (down from $82) is attributed to updated tax rates and expenses for 2024, as indicated by AstraZeneca’s earnings call commentary, which has implications for future years.

Despite the update not meeting expectations, BMO capital analysts remain optimistic about AstraZeneca’s growth prospects and uphold the Outperform rating.

Price Action: AZN shares are down 1.84% at $61.12 on the last check Monday.

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