Too Much Risk – D/G to HOLD
Whilst most companies go to great lengths to manage the volatility in consensus EPS, we believe AZN’s governance structure is actually adding to that volatility. Our analysis shows management could be incentivised to continue with one-time asset disposals despite no obvious need for them. These discretionary one-time items are a contributor to the sector-leading 42% spread for 2021 consensus EPS (Bloomberg). Moreover, given falling asset values and less available debt, AZN may now be a forced seller at lower valuations, which may not be in investors’ interests. In addition, we believe that AZN forecasts face considerable risk from COVID-19 disruption both in China & in the West. We assume guidance will be cut this year. Questionable governance & growing EPS risks, coupled with an underlying 2020 PE of 26x EPS, suggests better value in Novo, ROG & NOVN. DCF PT cut to £70. Downgrade to HOLD.For access to the full note, please contact Naresh Chouhan ( ).
AstraZeneca is a holding company. Through its subsidiaries, Co. operates as a biopharmaceutical company engaged in discovering, developing, manufacturing and commercializing its pipeline of small molecule and biologic prescription medicines, including targeted business development through collaboration, in-licensing and acquisitions. Co. is focused on three main therapy areas: Oncology, Cardiovascular and Metabolic Diseases, and Respiratory. Co. is also selectively active in autoimmunity, infection and neuroscience. In addition, Co. works across small molecules, oligonucleotides and other drug platforms, as well as biologic medicines.
Provided by our team of experienced analysts, our work is idea driven, based on independence of thought, sector expertise, and firmly focussed on fundamentals and valuation.
New Street Research is an independent, partner-owned, research firm specialising in equity and debt research. Our equity research embraces the following sectors:
- Pan European Telecom Services and Cable
- US Telecoms, Cable, Satellite and Towers
- Global Emerging Market Telecoms
- Japan Telecoms
- Asian Internet
- Pan European Healthcare
- Global healthcare thematic research
We provide debt research on:
- Pan European Telecom Services and Cable
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.