AstraZeneca share price under pressure ahead of Q4 earnings
Pharma giant AstraZeneca is expected to report solid numbers in its Q4 update, but more good news is needed to stabilise the share price after losses so far this year.
AstraZeneca earnings – what to expect?
AstraZeneca is expected to report fourth quarter (Q4) sales of $12.1 billion and adjusted earnings per share (EPS) of $1.54, according to consensus estimates. The company's strong business momentum suggests that it can achieve high-single to low-double digit revenue growth by 2024.
Margin outlook more mixed
Assessing the prospects for operating margins is more challenging. While AstraZeneca may see some gains in gross margins due to a positive product mix, these gains could be offset by profit-sharing agreements for certain products. The company has stated that research and development (R&D) expenses will be in the low 20s percentage of sales, which may vary from year to year but won't be a major contributor to margin expansion.
As a result, the focus for margin expansion will likely be on selling, general, and administrative (SG&A) expenses. AstraZeneca has highlighted two potential product launches in 2024, Airsupra for asthma and eplontersen for neuropathy. However, the company already has a presence in the respiratory market, and eplontersen is a specialty product that will require focused support. Even with the potential launch of Dato-DXd this year, it is expected that low to mid-single digit SG&A growth will be sufficient for margin expansion.
Overall, AstraZeneca's earnings report suggests a positive outlook for the company, with strong revenue growth expected and the potential for margin expansion through careful management of expenses.
Analyst ratings for AstraZeneca
Refinitiv data shows a consensus analyst rating of ‘buy’ for AstraZeneca with 7 strong buy, 15 buy, 6 hold and 1 sell – and a mean of estimates suggesting a long-term price target of 12,490.5 pence for the share, roughly 20% higher than the current price (as of 5 February 2024).
Technical outlook on the AstraZeneca share price
AstraZeneca’s share price, which is trading around 4% lower than at the beginning of the year, having been rejected by its 55-day simple moving average (SMA) at 10,902 pence at the beginning of January, currently hovers above last month’s 10,342p low.
If this support were to give way, the January and July 2023 lows as well as the 2021-to-2024 uptrend line at 10,184p to 10,000p would be back in sight.
AstraZeneca Weekly Candlestick Chart
Were the AstraZeneca share price to stabilize around its January low at 10,342p, though, as it did on the 25 January, another attempt at the upside may be seen.
For any short-term bullish momentum to gain traction, a rise and daily chart close above the late January high at 10,682p would need to ensue.
AstraZeneca Daily Candlestick Chart
For the medium-term trend to revert to bullish, a rise and daily chart close above the 200-day SMA, 2023-to-2024 downtrend line and the 11,022p January peak would need to be witnessed. Even then the solid July-to-October 2023 highs at 11,264p to 11,310p could throw a spanner in the works.
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