Takeda Earnings: Results in Line and Shares Fairly Valued

Narrow-moat Takeda’s third-quarter earnings were in line with expectations and the company’s full-year guidance. Revenue for the nine months has grown 4.6% compared with the same period last year, which is entirely due to foreign exchange. On a constant-currency basis, revenue growth is flat, as the growth from products like Entyvio and immunoglobulin were offset by declining sales from drugs facing the loss of exclusivity, or LOE, including Vyvanse, Azilva, Velcade, and Dexilant. Cost of sales for the quarter rose 3.4 percentage points compared with the same period last year, which we think is a useful reference point as it reflects the LOE events. Takeda maintained its full-year guidance of JPY 3.98 trillion revenue and JPY 1.015 trillion core operating profit.