AstraZeneca’s fourth quarter revenue increased by 25% to $14.9bn. That saw full-year growth rates reach 21% ahead of the company’s high-teens guidance. There was broad-based growth across all key therapeutic areas with particularly strong performances from cancer treatments as well as the Respiratory and Immunology division.
Underlying operating profit grew by 58% to $4.2bn as revenue growth outpaced the increase in expenses.
Free cash flow for the year increased by $1bn to $9.9bn, with net debt falling from $22.5bn to $24.6bn.
The company declared a dividend of $2.10 per share, with the total payout relating to 2024 rising 7% to $3.10.
2025 guidance came in better than expected. Revenue is expected to increase by a high single-digit percentage and underlying earnings per share by a low double-digit percentage.
The shares were up 5% in early trading.
Our view
AstraZeneca finished 2024 in good health. Guidance suggests a slower pace of growth over 2025 but while there can be no guarantee, the company’s established a strong record of upping its outlook as the year progresses.
Reaching its $80bn revenue target, and a mid-thirties operating margin by 2030 won’t be without challenges, but we’re impressed by progress so far. There’s a strong outlook for existing medicines as well as the pipeline of potential new products, an area where Astra's hit rate in the clinic has been impressive.
Cancer treatments are a cornerstone of Astra's offering. Often these drugs can maintain high growth levels for many years, as patient access improves, approvals are gained in new markets, and clinical trials prove their efficacy in additional diseases.
The diverse late-stage pipeline means there are lots of potential shots on goal as it pioneers technologies with the potential to replace existing treatment regimes. But given the risks inherent in drug discovery, investors need to be prepared for disappointments.
Astra is also seeing strong growth elsewhere. Ultomirisis, which came along with the acquisition of rare disease specialist Alexion, saw sales grow 34% last year. Farxiga which treats cardiovascular disease, kidney problems, and type 2 diabetes is growing very strongly too.
Leadership in several drug classes that treat respiratory diseases such as asthma and COPD is also contributing to the growth outlook. And recent clinical data presents an opportunity to expand the addressable patient population by meeting unmet needs. We see the broad focus on different disease areas as a positive.
Net debt sits at about 1.2x forecasted cash profits which doesn't look too demanding. The group's likely to put more money into research and development. Continuing success in drug approvals will be needed in order to offset the potential loss of revenue from patent expirations over the coming years.
For now, however, Astra is generating strong cash flows from its existing portfolio of marketed medicines. This helps support a prospective dividend yield of around 2.4% - though no returns are guaranteed.
Investor nerves have been put on edge, following the launch of investigations by the Chinese authorities into the business practices of current and former employees. The company itself is now facing a probe into unpaid import taxes.
Its initial assessment suggests a liability capped at around $5mn. If that holds true, then there’s scope for the company’s valuation to rise back towards the long-term average if successful execution of the strategy continues.
Environmental, social and governance (ESG) risk
The pharmaceuticals sector is relatively high-risk in terms of ESG. Product governance, particularly with safety and marketing, and affordable access to treatment are the key risk drivers. Labour relations, business ethics and bribery and corruption are also contributors to ESG risk.
According to Sustainalytics, AstraZeneca's overall management of material ESG issues is strong. However, ongoing investigations into employee activities in China should be closely followed. The executive compensation plan includes a target to eliminate greenhouse gas emissions by 2025, and the sustainability strategy is overseen by upper management. AstraZeneca has implemented a robust programme to monitor patient safety trends and ensure the quality and efficacy of its products.
Access to healthcare is a key strategic priority. The company has a strong human capital development programme with initiatives to recruit and retain highly specialised employees, highly pertinent following the acquisition of Alexion which adds 2,500 headcount.
AstraZeneca key facts
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