AstraZeneca Faces Challenges

After shares hit new highs earlier this year, the question is if AstraZeneca can provide good enough guidance to rekindle buying

Analysts Bearish on Earnings, Bullish on Stock

Back in November, AstraZeneca reported Q3 results, providing two positive things for traders: The company had returned to profitability and raised guidance for the rest of the year. Those were among the catalysts that helped support the stock's subsequent rise. The problem with reaching new highs is that even better news is necessary to sustain them. 

This is where things become a little complicated since a survey of analysts conducted by Refinitive and reported by Reuters shows that earnings are expected to drop to $0.67, well below the $1.67 reported three months ago. That's based on slower sales of $11.3B compared to $12.0B last year. The same analysts, however, are bullish on the stock, expecting it to rise. Partially this discrepancy could be understood in the context of AstraZeneca's acquisition of Neogene Therapeutics, which would initially drain some of the company's resources but presumably support growth further ahead.

After Setbacks, the Focus is on Guidance 

Since last reporting earnings, AstraZeneca has achieved several milestones, including EU approval for Enhertu, Imfinzi and Lynparza combinations and a deal to develop a treatment for respiratory diseases. Most recently, it got an extension of therapeutic indication from the EMA for Forxiga to treat symptomatic chronic heart failure.

On the downside, however, AstraZeneca also faces a similar problem as many other pharma firms now that covid is gone from public attention. Treatments have been in less demand, and the FDA just recently withdrew the company's EUA for its vaccine since the virus has mutated enough to make it ineffective. Focus will not be shifting to initial guidance for 2023, which is expected to be published along with earnings.

Astra

The stock price of AstraZeneca completed a wedge pattern at the record high of 11887 back in January and slid outside the lower trendline to trade somewhere between the 10 and 11k handles. If bulls fail to defend the 9400 through, the next major support is down at 6736. However, recapturing the 11k could see prices revisit the top and break to fresh highs.

The battle will remain tense in the 10-11k range in the short term until a break provides more clarity. But the chances lean towards more upside as long as the stock stays above 9400.

Source: Spreadex

Key Takeaways

AstraZeneca reported strong Q3 results and raised guidance for the year, leading to a stock rise. However, according to a survey of analysts, earnings are projected to drop with slower sales compared to last year. Despite these setbacks, the same analysts remain bullish on the stock's future prospects, shifting the focus to initial 2023 guidance when published along with earnings. In between, the company achieved several milestones, such as EU approval for Enhertu, Imfinzi and Lynparza combinations and a deal to develop treatments for respiratory diseases, offset by the FDA withdrawing its EUA for vaccine due to virus mutation.