Broker snap: Panmure remains a buyer of AstraZeneca

2nd Feb 2012 10:15

Panmure Gordon has reiterated its buy recommendation for drugs giant AstraZeneca after the group's fourth quarter results came broadly in line with forecasts.Panmure notes that the company's results were distorted by the proceeds from the disposal of Astra Tech and the charge on a couple of pipeline assets. On a clean basis, fourth quarter revenues rose by 2% to $8,656m, above the broker's forecast of $8,481m. However, core earnings per share (EPS) came in at $1.61, under Panmure's $1.75 estimate.However, the broker says the results were "overshadowed" by Astra's lowering of its mid-term guidance contribution from recently launched and pipeline products to $2-4bn, down from a previous estimate of $3-5bn.Nevertheless, Panmure seems pleased by the announcement of a 7,300 headcount reduction and share buyback programme of $4.5bn in 2012, well above its own $1.5bn estimate.While Astra said that core EPS would fall to between $6-6.30 this year, from $7.28 in 2011, this seems to be already accounted for with Panmure forecasting $5.96 and consensus predicting $6.17. Panmure even said that this could lead to "modest upgrades as the company tends to guide conservatively in Q1".The broker keeps its 3,600p target price, saying that the stock is trading (based on 2012 full-year forecasts) at a 33% price-to-earnings discount to sector peer GlaxoSmithKline.The market reaction to the results on Thursday was rather negative though, with shares trading 3.5% lower at 2,981.5p in mid-morning trade.BC