AstraZeneca experiences a drop over in its shares

AstraZeneca experiences a drop over in its shares

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This year might yield BEARISH earnings for AstraZeneca PLC as it proceeds to invest into Research and Development. This might give out a sharp drop down in sales for one of its blockbuster drugs, giving a surprise to investors.

Astra said it expected “core” earnings per share–which strip out exceptional items–to decline in the low to mid-single digits range in year 2016, at constant currencies. That surprised investors, who had expected the company would keep earnings guidance flat.

The profit warning came as Astra laid forward its net income of US$ 808 million in Q ending in December 2015 – in comparison to a loss of US$ 321 million in a year earlier time period. Likewise it had reported revenue of US$ 6.4 billion, i.e. a 5% decrease from an estimate of US$ 6.7 billion a year earlier. The sales increased 2%, excluding stronger effect of BULLISH Dollar.

The profit warning came as Astra posted net income of $808 million in the quarter ending Dec. 31, compared with a loss of $321 million in the year-earlier period. It reported revenue of $6.4 billion, a 5% decrease from $6.7 billion a year ago. Stripping out the effect of the strong dollar, sales increased 2%. Core net profit, a measure which strips out certain one-time items, rose 26% to $1.2 billion. Analysts expected revenue of $6.3 billion and core net profit of $1.2 billion.

As patent of Crestor inclines to expire, Astra expects a drop down in its sales, too. This has given an open decision platform to drug manufacturer to consider holding of its research spending steady rather reducing it off.

Despite of all the hurdles, Astra looks into a profound investment in Research and Development at year 2015 levels in today’s period. However, the company states to materially reduce sales and administrative expenses for reining costs.

Not to mention, the dilutive effect of US$ 2.7 billion acquisition of ZS Pharma and US$4 billion deal to acquire a controlling stake in Acerta Pharma.

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Javier Davis produces news on stocks, currencies, bonds, commodities, and real estate. His in-depth research covers most of the major financial markets in America, Europe, and Asia. His research is based on the interconnected relationships among economic and technical factors that drive valuations in the markets, with an emphasis on how to formulate investment strategies. From interest rates to inflation to economic growth and much more, the fundamental concepts presented on this website provide an essential foundation of knowledge for investors to profit in stocks, bonds, commodities, currencies, and real estate markets.

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