AstraZeneca’s share highs could be ‘slow-release’
Ken Odeluga November 5, 2015 11:30 PM
<p>Shares of Britain’s No.2 drug maker, largely remembered by the wider market for scorning last year’s £55/share offer from global No.1 Pfizer, had a good day. […]</p>
Shares of Britain’s No.2 drug maker, largely remembered by the wider market for scorning last year’s £55/share offer from global No.1 Pfizer, had a good day.
AZN’s London-listed shares traded as much as 4.5% higher after it lifted full-year revenue and earnings forecasts.
Its CEO also described giant Astra as ‘resilient’, despite the eroding sales of former top-sellers and threat of generic encroachment universal to virtually all large medicines producers.
Revised to flat
Among the pharma and ‘biopharma’s biggest challenges is mounting generic competition against heartburn drug Nexium, sales of which still fell, though less than expected in the third quarter.
Cholesterol drug Crestor’s US exclusivity ends next year.
Sales excluding FX noise were steady; EPS up 2%, helped after tightened cost control and disposals.
This enabled a flat full-year 2015 rev forecast revision (same currency basis) instead of the single percentage point fall expected before—consensus is at $5.97bn/$1.03 per share.
Too late for ‘Fast-track’
AZN also pushed the strengths of its pipeline again on Thursday.
It’s going into the den with smaller Bristol-Myers, World No.2 Merck & Co, and Roche in immune-oncology.
Developmental durvalumab for lung cancer will have data by year end, but is not now expected to get much-prized ‘fast-track’ status, as AZN had hoped.
Rival drugs from BMY and MRK already took the FDA’s US accelerated approval spot for a lung cancer drug in H1 2016.
The modest relative (exchange-rate adjusted) sales outlook and probably extended timeline on pipeline prospects back our view that Thursday’s two-month high in the London-listed AZN title should be the limit for the medium-term.
(LEFT-RIGHT) WEEKLY, DAILY, FOUR-HOURLY, HOURLY CHARTS
Please click image to enlarge
Especially as it’s currently challenged by a 200-day MA (blue), the nearby top of a descending channel in place almost a year to the day, and medium-term resistance from late September.
The weekly view also reveals a 200-period MA sitting atop the current week’s high.
And, yes, AstraZeneca stock has not yet recovered from rejecting PFE’s bid at £55/share.
Formidable resistance has set in lower than even that—4946p is visible on a weekly and daily basis, suggesting ‘real-money’ objections on valuation grounds.
After all, AZN’s forward enterprise value-to-EBITDA ratio was only about 70 points beneath its better-capitalised, structured and positioned rival Roche.
Softer US rally, stronger support
A more bullish view was slightly better reflected in AZN’s ADR at the time of writing.
(This product is not available to US clients.)
The underlying traded a more modest 1.2% higher.
The main task for short-term Astra bears was visible in the half-hour of AstraZeneca Plc. (USD) Daily Funded Trade from City Index.
A descending trend from late September was bolstered by support just above 3190.
The DFT also seems to have begun establishing younger trend-line support since late last month, from which the price bounced on Thursday.
Early upside progress beyond 3302, the start of a strong recent down leg seems unlikely.
However hopes to opportunistically fill the 3136/3175 downside gap didn’t look strong as this article was going online either.
Stochastic momentum was not overstretched (see sub-chart.)
An ‘exit long-signal’ based on the stochastic system was issued a short while before publication, but was relatively neutral with regards to active selling.
HALF-HOURLY CHART (ASTRAZENECA ADR DAILY FUNDED TRADE)
Please click image to enlarge
StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.