Shares of Pharmaceutical Giant AstraZeneca Rise on Upbeat 2022 Sales Outlook

AstraZeneca shares rose over 5% on Thursday after the British-Swedish pharmaceutical giant forecast higher sales this year and raised dividends for the first time in a decade despite it swung to lose in the fourth quarter.

In the last quarter of the year, the Anglo-Swedish pharmaceutical giant reported a net loss of $347 million versus a net profit of $1.01 billion the year before. The pharmaceutical company’s revenue jumped over 60% to $12.01 billion last quarter from a year earlier. That too beat the market expectations of $10.83 billion.

Last year, the company’s total revenues rose by 41% to a record $37.4 billion, driven by cancer drugs.

For the first time in 10 years, AstraZeneca is raising its dividend, paying $2.87 per share for 2021 and $2.90 per share for future years. The company reported quarterly adjusted earnings of $1.67​​ per share, beating the market expectations of $1.51 per share.

“4Q sales 7% ahead of cons on higher COVID-19 vaccine sales, with key growth drivers Tagrisso and Imfinzi light, but Lynparza and Calquence in-line. Top-line beat partially offset by lower gross margin, plus higher SG&A and R&D, for Core EBIT just 1% above, but 9% Core EPS beat on tax. Initial 2022 Revenue and Core EPS aim broadly as expected, with cons towards the upper-end. Shares likely modest uptick,” noted Peter Welford, equity analyst at Jefferies.

AstraZeneca stock traded 4.8% higher at GBX 8,756 on Thursday. The stock rose hardly 1% so far this year after surging more than 18% in 2021.

Analyst Comments

“AstraZeneca delivered a strong underlying performance in-line with 2021 expectations. Whilst the mid-point of the 2022 EPS guidance range is slightly below consensus, it reflects the beginning of the end of legacy medicine headwinds in China and significant investment for long-term revenue growth,” noted Mark Purcell, equity analyst at Morgan Stanley.

“Rising concern that AstraZeneca’s (AZN) continued investment for growth strategy could pressure operating margins has weighed on investor sentiment. However, we argue that this narrative misses the strong operating performance and overlooks the sector-leading growth outlook, even when considering increased investment spend (~13% earnings CAGR FY22-25e vs ~10% for the sector). With expectations re-basing lower, R&D spend better understood and the new products & pipeline creating optionality, we believe risks are moving to the upside. Hence, we reiterate our Overweight rating, with AZN remaining our preferred structural growth play.”

AstraZeneca Stock Price Forecast

Twelve analysts who offered stock ratings for AstraZeneca in the last three months forecast the average price in 12 months of 9,705.00p with a high forecast of 11,500.00p and a low forecast of 6,950.00p.

The average price target represents an 11.42% change from the last price of 8,710.00p. Of those 12 analysts, 10 rated “Buy”, one rated “Hold”, while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of 10,200p with a high of 12,000p under a bull scenario and 6,400p under the worst-case scenario. The investment bank gave an “Overweight” rating on the pharmaceutical company’s stock.

Several analysts have also updated their stock outlook. Guggenheim cut the target price to 9900p from 10100p. Liberum raised the target price to 9690p from 9220p. Jefferies lifted the target price to $62.50 from $60. Berenberg cut the target price to 10,000p from 10,500p.

Technical analysis suggests it is good to hold for now as 100-day Moving Average and 100-200-day MACD Oscillator gives mixed signals.

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