AstraZeneca shares on 'positive trajectory', says Panmure Gordon

24th Apr 2014 11:22

Panmure Gordon has kept a 'hold' recommendation for AstraZeneca after a mixed first quarter from the pharmaceutical group, but said there were some 'bright lights' in the results such as its heartburn treatment Nexium.AstraZeneca said that revenue totalled $6.42bn in the three months to March 31st, up 3% at constant exchange rates (CER) and ahead of the consensus forecast for $6.38bn. However, core earnings per share (EPS) declined by 11% at CER to $1.17, mainly due to investment in the company's key growth platforms and rapidly progressing pipeline. The consensus estimate was for EPS of $1.20. Profit before tax (PBT) of $1.83bn missed the forecast of $1.94bn.Nevertheless, Panmure Analyst Savvas Neophytou said that Astra's portfolio performed well overall, "with Nexium US in particular providing +11% beat which perhaps points to possible delay in genericisation that had been expected on May 27th 2014". He said: "We estimate that each month of delay of generic Nexium in the US, boosts AZ's profits by adding circa $130-140m (circa 1.5% of PBT). With pipeline improving (further four assets taken into phase III trials), the stock is on a positive trajectory and investors should not be short going into the key medical conference season."Nevertheless, Panmure chose to keep a 'hold' rating, pointing out that the stock still trades at a premium to the sector and at a price-to-earnings ratio of 14.5, rising to 17 on next year's earnings.The broker's target price of 3,900p was kept unchanged.The stock was 5.1% higher at 4,248p by 11:33.BC