AstraZeneca PLC - $AZN - Earnings Analysis: Strong revenue and earnings growth in FY 2024.

Business Model

AstraZeneca generates revenue through sales of prescription medicines across various therapy areas, including Oncology, Biopharmaceuticals (Cardiovascular, Renal & Metabolism, and Respiratory & Immunology), and Rare Disease. Revenue also includes Alliance Revenue from partnered medicines and Collaboration Revenue from milestones and upfront payments.

Revenue Sources

• Product Sales: Sales from territories where AstraZeneca has lead commercialization.
• Alliance Revenue: Income from collaborative arrangements related to sales made by collaboration partners (e.g., Enhertu, Tezspire).
• Collaboration Revenue: Milestone payments and upfront payments from business development activities where AstraZeneca retains a significant ongoing economic interest.

Income Statement Analysis

• Total Revenue increased by 25% compared to Q4 2023, driven by strong performance across various therapy areas.
• Operating Profit increased significantly due to revenue growth and effective cost management.
• Taxation saw a substantial change due to variations in the tax rate between periods.

Balance Sheet Analysis

• Total Assets increased, reflecting growth in various asset categories.
• Total Equity also increased, driven by profitability and other comprehensive income.
• Total liabilities increased due to debt and operations.

Cash Flow Analysis

• Net cash inflow from operating activities increased, reflecting improved profitability and working capital management.
• Net cash outflow from investing activities increased primarily due to acquisitions of subsidiaries.
• Net cash outflow from financing activities decreased, driven by increase issuance of long-term loans.

Capital Allocation

The Company's capital allocation priorities include: investing in the business and pipeline; maintaining a strong, investment-grade credit rating; potential value-enhancing business development opportunities; and supporting the progressive dividend policy. In FY 2025, the Company intends to increase the annual dividend declared to $3.20 per share and expects to increase capital expenditure by approximately 50%, driven by manufacturing expansion projects and investment in IT systems.

Management Commentary

Our company delivered a very strong performance in 2024 with Total Revenue and Core EPS up 21% and 19% respectively.

We also delivered nine positive high value Phase III studies in the year, which coupled with increasing demand for our medicines in all key regions, will help sustain our growth momentum into 2025.

In January 2025, AstraZeneca received a Notice of Transfer to the Prosecutor and an Appraisal Opinion from the Shenzhen City Customs Office regarding suspected unpaid importation taxes amounting to $0.9 million.

Overall Sentiment: Positive, with emphasis on sustained growth momentum, pipeline advancements, and geographic expansion. However, there are ongoing investigations in China that introduce some uncertainty.

Recommendation

Rating: Hold

Reason for Rating: AstraZeneca exhibits strong financial performance and a robust pipeline. However, ongoing investigations in China introduce uncertainty, warranting a Hold recommendation.

Disclaimer: This report is for informational purposes only and not investment advice. The analysis is based on limited information and subject to change. Investing in securities involves risks, including potential loss of principal. Past performance doesn't guarantee future results. Always conduct your own research, understand the risks, and consult a financial professional before making investment decisions.

Generated on: 2/7/2025, 10:48:07 AM