In the third quarter, AstraZeneca reported total sales of $9.87 billion, which represented a 50% increase in revenue over the same period last year and also above consensus revenue projections by around 3%.
AstraZeneca's organic sales for the third quarter was up 30.1% year over year, excluding the $1.31 billion in revenue from the rare disease business that was created following the conclusion of the Alexion Pharmaceuticals purchase earlier this year.
The rare disease portfolio, which comprises the top three medications in the category, Soliris, Ultomiris, and Strensiq, was the primary factor in AstraZeneca's revenue increase, accounting for approximately 40% of the company's growth. The COVID-19 vaccine contributed another 32%, or $1.05 billion, to the company's higher third-quarter sales. The remaining portion of the company's revenue increase was dispersed among AstraZeneca's therapeutic portfolios for cancer, cardiovascular, renal and metabolism, and respiratory and immunology, each of which had revenue growth for the third quarter that was well into double digits.
The company's top-growth at AstraZeneca is what also enabled it to generate a positive improvement in its core profits share (EPS). During the third quarter, the company's core EPS increased 14.9% year over year to $1.08.
The third quarter's robust revenue increase for AstraZeneca was not an exception, as evidenced by the company's extensive pipeline of 175 projects. AstraZeneca now has a large number of late-stage initiatives spread throughout its several therapeutic areas. Analysts predict that the firm will be able to increase its EPS by more than 20% yearly over the course of the next five years due to the projects that are now in the final phases of clinical testing.
AstraZeneca's $24.7 billion in net debt as of the third quarter is acceptable for a firm of its scale and indicates that the management team is judiciously leveraging debt to increase shareholder value. As a result, it is hardly unexpected that S&P Global has assigned AstraZeneca's long-term debt an A- rating.
With shares currently selling at $55, AstraZeneca has a forward price-to-earnings (P/E) ratio of 14. I would contend that this premium is wholly deserved, even if it is somewhat higher than the future P/E ratio of 10.8 that is typical for the drug makers' overall sector. That's because AstraZeneca has by far the highest growth profile in its industry among the 19 other companies that were chosen, with an anticipated 20.6% annual profits growth over the next five years.
Overall, income and growth investors alike might add AstraZeneca to their portfolios to steadily increase their wealth thanks to the company's yield and growth combination at a fair value.