AstraZeneca Earnings: Steady Results and Pipeline Gains Set Up Top-Tier Industry Growth

AstraZeneca reported steady fourth-quarter results and issued 2024 guidance largely in line with our expectations. While we believe the market was expecting more robust results, we are not making any changes to Astra’s fair value estimate and continue to view the stock as undervalued. We believe the market is increasingly concerned about several drugs maturing and posting slowing growth and worried about lack of significant margin expansion. While we do expect some deceleration in key products such as cancer drugs Tagrisso and Calquence and generic pressure on cardiometabolic drug Farxiga in 2025, we expect several recently launched drugs to help propel top-tier industry growth for the company over the next four years. Also, we expect Astra to pivot marketing resources to newer launches from the maturing drugs to help support close to 300 basis points of margin expansion over the next four years.