10th Feb 2022 17:42
(Alliance News) - AstraZeneca PLC's annual results were largely positive, though analysts noted the pharmaceutical firm faces "execution risks" as well the winding down of Covid-19 jab sales.
For 2021, Astra's revenue jumped 41% to USD37.42 billion from USD26.62 billion in 2020. Excluding Covid vaccine revenue, total sales for the year still rose a robust 26% to USD33.44 billion.
Despite the sales growth, Astra swung to a pretax loss of USD265 million from a profit of USD3.92 billion year-on-year.
Earnings per share plunged 97% to USD0.08. But core EPS rose 32% to USD5.29. The difference is due to the acquisition of Alexion Pharmaceuticals, impairments and restructuring charges, Astra said.
"Covid vaccine sales added USD4 billion to sales at AstraZeneca, but coronavirus had the opposite impact on profits. Outfitting staff with PPE and providing tests together with increased investment in vaccine and treatment development all weighed on the bottom line," Hargreaves Lansdown analyst Laura Hoy commented.
Looking to 2022, Astra said revenue at its Covid-19 medicine arm is to decline in the low-to-mid twenties percentage range. Vaccine sales are expected to dwindle, though revenue from its Evusheld Covid antibody treatment will pick up some of the slack.
Hoy added: "Management's expecting Evusheld, a monoclonal antibody treatment, to make up a greater proportion of sales going forward. This will boost profitability for the Covid division, though margins won’t reach the same 60%+ levels the rest of the company enjoys.
"There's a lot riding on the successful integration of Alexion and growth in AstraZeneca's newly approved drugs like Evusheld. Net debt more than doubled in the wake of the acquisition and as interest rates rise, AZN will need sufficient cashflow to pay it down. Astra's results were undoubtedly positive, but execution risk looms."
Interactive Investor analyst Keith Bowman said Astra's fourth quarter results were "robust", though he added the development of the Covid jab has distracted the company from its core business.
"In all, while Astra's development of a Covid vaccine should be applauded, time spent developing and distributing its coronavirus vaccine has been time away from its core business. The purchase of Alexion at what is considered a full price is also yet to be fully justified," Bowman added.
"That said, Astra should be able to further leverage its own geographical footprint and extensive emerging markets presence to keep growing Alexion sales. The Covid vaccine has raised Astra’s global profile significantly, with its previous not for profit status now being removed. For now, and with further innovation and new drug successes ongoing, analyst consensus opinion continues to point to a strong 'buy'."
Broker Liberum rates Astra at Buy. Liberum added that investors may be concerned by Astra's warning of China sales.
The FTSE 100 company said 2022 revenue from China is "expected to decline by a mid-single-digit percentage". Astra put this down to the National Reimbursement Drug List and volume-based procurement measures hurting some drugs. Volume-based procurement policies are aimed at bringing drug costs down.
Liberum added: "Overall, the slight EPS miss and the language on China may disappoint today."
Astra shares shook off the uncertainty, rising 1.6% to 8,500.00 pence each in London on Thursday.
By Eric Cunha; [email protected]
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