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New drugs inspire AstraZeneca

The future product pipeline looks promising for AstraZeneca shareholders - but what can they expect until then?
July 31, 2015

New cancer drugs are still top of the agenda at pharma giant AstraZeneca (AZN). In the second quarter alone the group secured two new regulatory approvals. The first was won in the US for Iressa, a new lung cancer treatment, while the second - a breast cancer drug called Faslodex - was given the green light in China.

IC TIP: Hold at 4,300p

The product pipeline is crucial to Astra's future growth and the company has been pouring every spare penny into developing new drugs. There are 119 new medicines in the works and, in the first half, the amount Astra spent on development rose from 18 per cent of sales to nearly 23 per cent.

Until these new products start hitting the market, however, investors have been warned not to expect significant earnings growth. But half-year revenues improved by 1 per cent to $12.4bn (£7.9bn) at constant currencies, and core EPS rose 3 per cent in the second quarter. As such, the board has upped its guidance for the remainder of the financial year. Revised expectations see full-year revenues falling by a low single-digit as opposed to a mid single-digit per centage.

Analysts at Deutsche Bank expect pre-tax profits of $6.54bn this year, giving EPS of 422ȼ, compared with $6.43bn and 427ȼ in 2014.

ASTRAZENECA (AZN)
ORD PRICE:4,300pMARKET VALUE:£54.3bn
TOUCH:4,299-4,301p12-MONTH HIGH:4,906pLOW: 4,019p
DIVIDEND YIELD:4.1%PE RATIO:71
NET ASSET VALUE:1,447ȼ*NET DEBT:38%

Half-year to 30 JuneTurnover ($bn)Pre-tax profit ($bn)Earnings per share (ȼ)Dividend per share (p)
201413.21.5010357.5
201512.41.3499.057.5
% change-6-11-4-

Ex-div: 13 Aug

Payment: 14 Sep

*Includes intangible assets of $32bn, or 2,529ȼ a share

£1 = $1.56