AstraZeneca reported first quarter revenues of $7.3bn, up 11% at constant exchange rates. That was driven by strong growth in Oncology as well as $275m of coronavirus vaccine sales, with the group also benefitting from very strong sales growth in Emerging Markets. Excluding the vaccine, which is being sold at no profit, sales rose 7% to $7.0bn.
Core earnings per share for the quarter came in at $1.63, up 53% year-on-year.
The shares rose 2.6% in early trading.
Nicholas Hyett, Equity Analyst at Hargreaves Lansdown comments;
“The pandemic has on the whole been bad news for AstraZeneca’s bottom line. Vaccine sales are boosting sales, but a commitment to sell the it at cost while the pandemic lasts means profits are unaffected.
However, a very strong pipeline in new and recently released oncology drugs has more than made up for the pandemic disruption and sales are moving along nicely. We’re also impressed by the group’s ability to revitalise sales of more mature drugs by focussing on emerging markets – this quarter it’s been Nexium receiving a second lease of life through sales in China.
Long term we do still have some concerns about the sustainability of the dividend, which in recent years has significantly outpaced the group’s free cash flow generation. That’s led to a build up of debt, which the pending Alexion acquisition will increase still further.
Overall though we think Astra is in a good place. A robust looking pipeline gives it options in the future and Alexion will be an extra shot in the arm on that front. Meanwhile the distribution network looks in good health, giving it options when drugs mature that many other pharmaceutical giants lack. The newly acquired expertise in vaccines is no bad thing either in a world which will be far more aware of viruses going forwards. If the group can nudge up it’s free cash flow as pandemic headwinds subside it will be in a sweet spot few pharmaceutical groups enjoy.”
