8 Jun

What to Expect for AstraZeneca in Fiscal 2018

WRITTEN BY Kenneth Smith

Financial guidance

AstraZeneca (AZN) has maintained its guidance for fiscal 2018. The company expects a low single-digit percentage increase in product sales, and core EPS of $3.30–$3.50. This expected growth in product sales is weighted towards the second half of the year, reflecting the impact of generic competition for Crestor in Europe and Japan and an increased revenue contribution from new medicines.

What to Expect for AstraZeneca in Fiscal 2018

AstraZeneca expects the sum of externalization revenue and other operating income and expenses to fall YoY (year-over-year). It expects core R&D (research and development) costs to see a low-single-digit percentage decline or to be stable.

AstraZeneca is focused on reducing its operational and infrastructure costs. However, the company expects total core SG&A (selling, general, and administrative) costs to increase by a low-to-mid-single-digit percentage in fiscal 2018 due to targeted support for medicine launches, including Imfinzi in oncology and Fasenra in the respiratory market. Year-over-year, AstraZeneca expects its restructuring costs to fall and its core tax rate to rise, to 16%–20% from 14%.

Expected performance in 2018

In fiscal 2018, analysts expect AstraZeneca to generate revenue of $22.6 billion and gross profit of $18.2 billion, with a gross margin of 80.5%. Due to the company’s cost management measures, analysts expect its SG&A expenses to fall 19% YoY to $8.3 billion, and its R&D expenses to fall 8.6% YoY to $5.3 billion. In the next part of this series, we’ll look at AstraZeneca’s cash flow and valuation.

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