London Markets: AstraZeneca slumps in London as earnings disappoint, vaccine profits modest
London stocks fell Friday, leaving the main index holding onto a small weekly gain as heavily weighted shares of AstraZeneca fell on poorly received results.
The pharmaceutical giant’s stock
slid more than 4% after it announced a net loss for the third quarter, despite a jump in revenue, due to costs of developing its COVID vaccine.
AstraZeneca said the vaccine added $0.01 to earnings per share in the quarter, but that it lost $0.03 per share from the development since the start of 2021. Still, the company expects a limited contribution in the fourth quarter, progressively transitioning to modest profitability as it receives new orders.
The company backed its guidance for the full year, saying it expects revenue excluding the coronavirus vaccine to grow by a low-twenties percentage.
“AstraZeneca has seen little enthusiasm for their plan to shift into a strategy of ‘modest profitability’ for their vaccine product, with the company hoping to strike new deals at a more advantageous price,” said Joshua Mahony, senior market analyst at IG, in a note to clients, of the share reaction.
“Coming off the back of a nine-month period that brought $2.2 billion of vaccine sales, shareholders are clearly looking for the firm to boost the earnings outlook after EPS fell short of expectations,” Mahony added.
Core EPS missed consensus by 13%, while quarterly sales were 1% short of forecasts, said Jefferies team of analysts led by Peter Welford, who said they aren’t shifting away from a buy recommendation. “Risk-reward remains positive at these levels, in our view, given AZN’s compelling growth profile within EU Pharma…Pipeline catalysts remain and new launches should aid ongoing momentum,” said the team.
Jean-Jacques Le Fur, analyst at Bryan Garnier & Co. echoed optimism, say AstraZeneca has “good prospects” for sales growth and investment in research and development and operating expenses to prepare future launches “would help to maintain [a] strong growth trajectory.” Shares of AstraZeneca have gained 23% this year.
The FTSE 100 index
fell 0.3% to 7,359.58, while the pound
rose 0.1% to $1.3388.
The resource sector was also taking a hit as oil prices
fell, with precious and industrial metals also lower, apart from copper
Shares of Royal Dutch Shell
were all down over 1%.