Broker snap: Future brighter than feared at Astra

27th Jan 2011 13:01

Results from drugs giant AstraZeneca were in line with expectations but 2011 guidance was less severe than Charles Stanley had been expecting."We note that guidance for a flat to low single-digit decline in the top line (using constant exchange rates) is broadly in line with existing consensus. The forecast for pre-R&D [research & development] operating margin is also in line with existing consensus," said Jeremy Batstone-Carr, head of investment research at stockbrokers Charles Stanley."The balance sheet shows an improvement in AstraZeneca's net cash position and we wait to see how the company will chose to utilise this flexibility. It should be noted that were the enhanced share buyback programme to be maintained through the next three years, this would likely have a significantly beneficial impact on EPS [earnings per share] growth expectations going forward," Batstone-Carr added.On the down side, the group has "lowered its pipeline contribution within long-term guidance by c.$1bn (to $3.5bn)," and, in the absence of an explanation from Astra, investors might speculate that it pertains to the delay in the approval of the blood thinning drug Brilinta and the discontinuation of Certriad, Batstone-Carr suggests.The broker is sticking with its "accumulate" rating and confessed it was impressed by the results and also the guidance, which proved much less negative than feared.