AstraZeneca Boosts 2024 Outlook with Strong Q3 Results
AstraZeneca PLC (NASDAQ:AZN) has upwardly revised its 2024 revenue and earnings forecasts for the second time this year following a robust third-quarter performance that exceeded analysts' predictions. The pharmaceutical giant's growth is attributed to strong demand for oncology and rare disease treatments.
The company announced plans to invest an additional $2 billion in research and development and manufacturing facilities in the U.S. This investment, targeting Maryland, Texas, and California, is part of a larger $3.5 billion commitment to expand U.S. operations by the end of 2026.
CEO Pascal Soriot emphasized that the strategic investment in the U.S. reflects the country's favorable business environment and the quality and innovative capacity of its talent pool. This announcement came a week after Donald Trump's victory in the U.S. presidential elections.
AstraZeneca now forecasts high single-digit percentage growth for both revenue and earnings per share (EPS) through 2024, an upgrade from the previously estimated mid-single-digit percentage growth. This revision is based on constant exchange rates for both revenue and EPS.
Despite the positive outlook, AstraZeneca's shares experienced volatility in early trading. Initially rising by 2%, the shares were down by 0.4% at 0828 GMT. The company’s stock has fallen nearly 17% over the past three months due to concerns about its operations in China, where it faces multiple investigations. Year-to-date, the stock has underperformed, declining almost 6% compared to an approximately 9% rise in the broader European healthcare sector.
The company’s operations in China came under scrutiny, particularly following the detention of AstraZeneca's China president, Leon Wang, by Chinese authorities last week; the company stated it was not aware of the reasons behind this. CEO Soriot expressed the company’s seriousness in addressing matters in China.
To alleviate investor concerns regarding a potential fraud investigation in China, AstraZeneca’s CFO, Aradhana Sarin, briefed sell-side analysts on Monday. The company highlighted its significant investment in China, noting that local business contributed 13% to group revenues last year.
AstraZeneca confirmed that it has not been informed of any investigations initiated by Chinese authorities but stated it would cooperate if requested. The company's third-quarter revenue in China reached $1.7 billion, reflecting a 15% increase at constant exchange rates, compared to $1.5 billion reported in the same quarter last year. Third-quarter revenue in the U.S. was $6 billion, marking a 23% growth at constant currency.
In addition to its financial updates, AstraZeneca, alongside its partner Daiichi Sankyo, has submitted a new biologics license application in the U.S. for the accelerated approval of datopotamab deruxtecan, an experimental drug for the treatment of specific adult patients with previously treated metastatic non-small cell lung cancer. Analysts and investors have reacted positively to this new application, believing it increases the chances of approval for the drug in that patient group.