AstraZeneca Beats on Q3 Earnings, Ups 2024 View, to Invest $3.5B in US

AstraZeneca’s AZN third-quarter 2024 core earnings of $1.04 per American depositary share (ADS) beat the Zacks Consensus Estimate of $1.01 per share. Core earnings of $2.08 per share fell 20% year over year on a reported basis and 27% at constant exchange rates (CER).Total revenues of $13.57 billion rose 18% on a reported basis and 21% at CER, driven by higher product sales and alliance revenues from partnered medicines. Revenues also beat the Zacks Consensus Estimate of $13.04 billion.All growth rates mentioned below are on a year-over-year basis and at CER.AZN’s Product Sales, Alliance & Collaboration RevenuesProduct sales rose 20% to $12.95 billion, driven by strong underlying demand trends for its medicines, mainly cancer and rare disease drugs. Among AstraZeneca’s various therapeutic areas, Oncology product sales were up 22%, while Cardiovascular, Renal and Metabolism (CVRM) product sales rose 20%. The Respiratory & Immunology (R&I) segment rose 29%. Vaccines & Immune (V&I) therapies sales rose 49%. Rare disease product sales were up 11%. Sales of other medicines were down 8%.Collaboration revenues were $59 million in the quarter, down 40%. Alliance revenues rose 50% to $559 million, driven by continued revenue growth from partnered medicines.Alliance revenues included $361 million from Daiichi Sankyo for Enhertu and $123 million of AstraZeneca’s share of gross profits in the United States from partner Amgen AMGN for Tezspire.Alliance revenues also included $49 million for Beyfortus. AstraZeneca records 50% share of gross profits on sales of Beyfortus in major markets outside the United States and 25% of brand revenues in rest of world markets received from partner Sanofi SNY as Alliance revenues. It also records Beyfortus product sales from products supplied to partner Sanofi under the Vaccines & Immune Therapies segment.AZN’s Most Key Oncology Drugs OutperformIn Oncology, Tagrisso recorded sales of $1.67 billion, up 17% year over year, on strong demand as a first-line and adjuvant treatment. Tagrisso sales beat the Zacks Consensus Estimate of $1.63 billion as well as our model estimate of $1.64 billion.Lynparza total revenues rose 13% to $778 million, driven by increased market share/demand growth for all approved indications. Lynparza sales also benefited from volume growth in China, driven by increased market share. Lynparza sales beat the Zacks Consensus Estimate and our estimate of $760 million and $760.5 million, respectivelyImfinzi generated sales of $1.20 billion in the quarter, up 16%, driven by demand growth across all approved indications, partially offset by mandatory price reductions in Japan. Imfinzi sales missed the Zacks Consensus Estimate of $1.23 billion and our estimate of $1.22 billion.Calquence generated sales of $813 million in the quarter, up 25% year over year, benefiting from continued new patient share gains in frontline CLL across the United States and Europe.The new breast cancer drug Truqap (capivasertib), approved in November 2023, recorded $125 million in revenues in the third quarter of 2024 compared with $92 million in revenues in the previous quarter.AZN’s CVRM Segment PerformanceIn CVRM, Farxiga recorded product sales of $1.94 billion in the quarter, up 27% year over year, reflecting accelerated volume growth. The label expansion approvals for heart failure and chronic kidney disease (CKD) indications contributed to Farxiga’s sales growth in the United States and Europe. In Emerging markets, Farxiga is witnessing solid growth despite generic competition in some markets. However, generic competition in Canada hurt sales. Farxiga sales beat the Zacks Consensus Estimate of $1.89 billion and our model estimate of $1.81 billion.Brilinta/Brilique sales were $327 million in the reported quarter, down 1%.New drug Wainua generated $23 million in product sales in the quarter compared with $16 million in the previous quarter.AZN’s R&I Segment PerformanceIn R&I, Symbicort sales rose 31% in the quarter to $705 million, driven by strong underlying demand in the United States and Emerging markets, which offset the impact of generic erosion in Europe and Japan. Symbicort sales beat the Zacks Consensus Estimate of $561 million as well as our model estimate of 545.8 million. Pulmicort sales declined 4% to $138 million.Fasenra recorded sales of $436 million in the quarter, up 13% year over year, driven by strong demand growth and market share gains. The drug’s sales beat the Zacks Consensus Estimate of $416 million and our model estimate of $402 million.Tezspire recorded total revenues of $191 million compared with $160 million in the previous quarter. Amgen records product sales in the United States and AstraZeneca records its share of U.S. gross profits as Alliance revenues. AstraZeneca books Product Sales in markets outside the United States.AZN’s Rare Disease, V&I & Other SegmentIn the Rare Disease portfolio, Soliris recorded sales of $606 million, down 18% year over year due to conversion to Ultomiris. The drug’s sales missed the Zacks Consensus Estimate as well as our model estimate of $661 million.Ultomiris revenues were $1.03 billion, up 35%, driven by patient demand, growth in neurology indications, geographic expansions in new markets and continued conversion from Soliris.In Other Medicines, sales of Nexium declined 8% to $216 million.In Vaccines & Immune Therapies, AstraZeneca recorded $238 million as revenues from Beyfortus, which included alliance revenues mentioned earlier as well as sales of manufactured Beyfortus product to Sanofi.AZN Ups 2024 GuidanceAstraZeneca raised its sales and earnings growth expectations for the year. It expects total revenues and core earnings per share to increase by a high teens percentage compared with the previous guidance of an increase in the mid-teens percentage at CER.Foreign exchange is still expected to have a low single-digit percentage adverse impact on total revenues and a mid-single-digit percentage adverse impact on core EPS in 2024.Our Take on AZN’s Q3 ResultsAstraZeneca’s third-quarter results were better than expected, as it beat estimates for earnings as well as sales. Revenues rose across all segments with sales of most of the key drugs, including Tagrisso, Fasenra, Farxiga, Lynparza and Symbicort beating estimates. Based on a strong performance this year and increasing confidence in achieving certain sales-based milestones, management raised its top- and bottom-line guidance for the second time this year.AstraZeneca also announced that it plans to invest $3.5 billion by 2026 to expand R&D and manufacturing footprint in the United States. This includes a new capital investment of $2 billion that will create more than 1,000 jobs.Shares of AstraZeneca were down 1.2% in pre-market trading on Tuesday despite the earnings beat and guidance raise.Year to date, the stock has declined 3.8% against the industry’s 11.5% rise.Image Source: Zacks Investment ResearchRecently, there have been rising concerns over the ongoing investigations in China, which seem to have overshadowed the company’s strong quarterly performance. The China issues resulted in AZN stock declining 9% this month. Last week, AstraZeneca said that the president of its China subsidiary, Leon Wang, is under investigation by Chinese authorities.  With respect to the investigations, chief executive officer, Pascal Soriot, said that the company is aware that Chinese authorities are investigating some current and former AstraZeneca employees for medical insurance fraud, illegal drug importation and personal information breaches. The company went on to say that it has not received any notification about investigations on AstraZeneca China. Some more commentary is expected on the conference call.Overall, AstraZeneca’s blockbuster medicines, including Tagrisso, Fasenra, Farxiga, Imfinzi, Lynparza, Soliris and Ultomiris, are driving the company’s top and bottom-line growth, backed by increasing demand trends. The company is confident that the growth will continue in 2025.Backed by its new products and pipeline drugs, AstraZeneca believes it can post industry-leading top-line growth in the 2025-2030 period. AstraZeneca expects to generate $80 billion in total revenues by 2030. By the said time frame, AstraZeneca plans to launch 20 new medicines. It believes that many of these new medicines will have the potential to generate more than $5 billion in peak-year revenues. The company is also on target to achieve a mid-30s percentage core operating margin by 2026.AZN’s Zacks RankCurrently, AstraZeneca has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.AstraZeneca PLC Price and Consensus AstraZeneca PLC price-consensus-chart | AstraZeneca PLC Quote5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Sanofi (SNY): Free Stock Analysis Report AstraZeneca PLC (AZN): Free Stock Analysis Report Amgen Inc. 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