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MarketScreener Homepage  >  Equities  >  London Stock Exchange  >  GlaxoSmithKline    GSK   GB0009252882

GLAXOSMITHKLINE

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AstraZeneca braces for coronavirus hit, but no impact so far

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02/14/2020 | 08:41am EST
FILE PHOTO: The company logo for pharmaceutical company AstraZeneca is displayed on a screen on the floor at the NYSE in New York, United States

AstraZeneca forecast a likely slowdown in revenue growth this year, assuming a hit from China's coronavirus epidemic lasting up to a few months, although it added there had been limited disruption to its operations so far.

Shares in the company, one of the world's major drugmakers, tumbled as much as 6% in early Friday trade after fourth-quarter results also missed analysts' expectations.

However, they recovered after CEO Pascal Soriot played down the impact of the coronavirus outbreak on the business so far. He told Reuters revenues could reach the top end of its guidance range if the epidemic was brought quickly under control.

The company, moving into a third year of growth, predicted revenues would rise by a high single-digit to a low double-digit percentage at constant exchange rates this year, compared with 13% in 2019.

Analysts are currently forecasting growth of 10%, according to Refinitiv data, although Jefferies analysts said anything below a double-digit estimate could be a disappointment.

"We want to be actively conservative in our outlook," Soriot said on a call with journalists, describing the situation around the virus that has killed more than 1,350 people in China and infected tens of thousands more, as "full of uncertainty."

"So far, we have limited disruption," he added.

At 1312 GMT, AstraZeneca shares were down 2.3% at 7,448 pence.

China was once again a key driver for the firm in the final quarter of 2019, with sales there surging 28% to $1.19 billion, making up 19% of total product sales in the period.

"Now in a much better place, AstraZeneca should be able to weather any coronavirus-related storm," AJ Bell investment director Russ Mould said.

Last week, British rival GSK said it had not faced much disruption to its supply chain from the virus outbreak, but was monitoring the situation.

SALES DISAPPOINT

In the fourth quarter, AstraZeneca's product sales of $6.25 billion and core earnings of 89 cents per share missed analysts' expectations, according to a company-provided consensus.

Sales of its top-selling cancer drug Tagrisso fell short of forecasts due to adjustments for U.S. rebates and discounts, Bryan Garnier analyst Eric Le Berrigaud said.

"New drugs which were growth drivers all through 2019 posted below-expectations fourth-quarter sales," Berrigaud said.

AstraZeneca forecast core earnings per share would rise by a mid- to high-teens percentage in 2020, compared with just 1% in 2019 and analysts' current consensus forecast of about 20%.

Soriot also said the company was on track to reach an operating profit margin target of more than 30% in 2021.

By Pushkala Aripaka and Ludwig Burger

Stocks mentioned in the article
ChangeLast1st jan.
AJ BELL PLC -3.25% 372.5 Delayed Quote.-13.17%
ASTRAZENECA PLC 1.55% 7416 Delayed Quote.-2.59%
GLAXOSMITHKLINE 2.17% 1638.2 Delayed Quote.-8.23%
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Financials (GBP)
Sales 2020 34 843 M
EBIT 2020 9 123 M
Net income 2020 4 300 M
Debt 2020 23 712 M
Yield 2020 4,90%
P/E ratio 2020 19,3x
P/E ratio 2021 18,7x
EV / Sales2020 3,01x
EV / Sales2021 2,86x
Capitalization 81 247 M
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Mean consensus OUTPERFORM
Number of Analysts 25
Average target price 1 861,48  GBp
Last Close Price 1 632,60  GBp
Spread / Highest target 37,2%
Spread / Average Target 14,0%
Spread / Lowest Target -5,86%
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Emma N. Walmsley Chief Executive Officer & Executive Director
Jonathan Richard Symonds Non-Executive Chairman
Iain James Mackay Chief Financial Officer & Executive Director
Karenann K. Terrell Chief Technology & Digital Officer
Hal V. Barron Executive Director & Chief Scientific Officer
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