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What's in Store for AstraZeneca (AZN) This Earnings Season?

Zacks Equity Research
·4-min read

AstraZeneca plc AZN is scheduled to report fourth-quarter and full-year 2019 results on Feb 14

The company’s earnings beat estimates in each of the past four quarters with the average surprise being 36.96%.

 

AstraZeneca PLC Price and EPS Surprise

 

AstraZeneca PLC Price and EPS Surprise
AstraZeneca PLC Price and EPS Surprise

AstraZeneca PLC price-eps-surprise | AstraZeneca PLC Quote

 

Shares of AstraZeneca have increased 36% in the past year compared with the industry‘s increase of 13.7%.

 

 

In the last reported quarter, AstraZeneca delivered a positive earnings surprise of 11.11%.

Factors at Play

Sales of newer medicines, mainly cancer drugs Lynparza, Tagrisso and Imfinzi are expected to have benefited the company’s top line in the fourth quarter by offsetting lower sales of many other legacy medicines.

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Product sales in the third quarter benefited from favorable inventory and gross-to-net movements. However, the benefits were absent this time around.

Continued underlying demand growth and strong uptake in the first-line setting are likely to have pushed up sales of Tagrisso in the quarter.

Sales of Lynparza, which is marketed in collaboration with Merck MRK, are likely to have been driven by expanded use in ovarian and breast cancer. In December, the FDA granted approval to Lynparza as a first-line maintenance treatment in germline BRCA-mutated metastatic pancreatic cancer. However, this label expansion is unlikely to have contributed to the drug’s sales in the fourth quarter.

Fourth-quarter sales of Imfinzi are likely to have benefited from strong demand trends in the United States, especially in lung cancer indications.

AstraZeneca’s other major drugs like Fasenra, Brilinta and Farxiga are likely to have contributed to sales growth the soon-to-be reported quarter.

However, please note that increased competition and formulary plan changes for competitors’ drugs hurt sales of Farxiga in the United States in the third quarter. We expect these factors to have hurt sales in the fourth quarter as well.

Sales of AstraZeneca’s COPD drug Symbicort’s have been declining due to pricing pressure and competition. These factors are likely to have impacted fourth-quarter sales of the drug as well.

Sales of AstraZeneca’s major legacy drugs have been declining due to rising generic competition. The trend is likely to have continued in the fourth quarter.

On the fourth-quarter conference call, we expect management to discuss launch plans for AstraZeneca and partner Japan’s Daiichi Sankyo’s trastuzumab deruxtecan, which was approved by the FDA in metastatic breast cancer in December 2019 under the brand name, Enhertu.

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for AstraZeneca in this reporting cycle. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that is not the case here as you will see below.

Earnings ESP: AstraZeneca’s Earnings ESP is 0.00% as both the Zacks Consensus Estimate and the Most Accurate Estimate are pegged at 53 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: AstraZeneca carries a Zacks Rank #3.

Stock to Consider

Here are two biotech stocks that have the right combination of elements to beat on earnings this time around.

Karyopharm Therapeutics Inc. KPTI has an Earnings ESP of +3.05% and a Zacks Rank #3. The company is scheduled to release fourth-quarter results on Feb 27.

Nektar Therapeutics NKTR has an Earnings ESP of +8.36% and a Zacks Rank #3.

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AstraZeneca PLC (AZN) : Free Stock Analysis Report
 
Merck & Co., Inc. (MRK) : Free Stock Analysis Report
 
Nektar Therapeutics (NKTR) : Free Stock Analysis Report
 
Karyopharm Therapeutics Inc. (KPTI) : Free Stock Analysis Report
 
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Zacks Investment Research