Friday newspaper share tips: AstraZeneca at least worth holding on to

AstraZeneca was in focus in Friday’s newspaper share tips after it warned 2016 profits could be hit with the expiry of the patent on its anti-cholesterol drug Crestor.

The FTSE 100 company said it sees a low to mid single-digit percentage decline in both sales and profits in 2016 as it reported its full-year results for 2015.

Astrazeneca expects to lose exclusive rights to Crestor, one of the world's leading stations, in May.

Crestor achieved global sales of more than $5bn (£3.4bn) last year, surpassing other AstraZeneca drugs.

"As we face the transitional period of patent expiry for Crestor in the US, we're confident that our strong execution on strategy, combined with the benefits of focused investments and new launches, keeps us on track to return to sustainable growth in line with our targets," said chief executive Pascal Soriot.

Meanwhile, the company reported full year 2015 core earnings per share rose by 7% on a constant exchange rate to $4.26 (£2.92), and by 22% in the fourth quarter alone.

Pre-tax profits, however, fell 1% to £3.07bn from the previous year as revenue came in broadly flat.

Its total revenue growth for the year was 1%, to $24.7bn, with its gross margin on product sales up one percentage point.

In The Telegraph, Questor said the importance of Crestor can’t be underestimated.

It reminded investors of the effects when the company lost its US patent of heartburn treatment Nexium, with sales last year down 32% to $2.5bn.

But the columnist said it’s not all doom and gloom as new drugs come to market and a strong development pipeline

“Astra’s success rides on new drugs replacing its old blockbuster Crestor,” it said.

“The shares, trading on 16 times forecast earnings and offering a prospective dividend yield of 4.2pc, don’t adequately reflect those risks, and we worry they could disappoint in the year ahead.”

Questor downgraded its recommendation on AstraZeneca to ‘hold’, saying it thinks the shares should be held for income.

In The Times, Tempus looked a number of the company’s future risks, with significant acquisitions diluting earnings, the impact of the high dollar, and of course the loss of Crestor’s patent in May.

But it said the risk to the patent cliff had loomed for years.

“This year was always going to be the trough, as AstraZeneca waits for its promising new compounds, many in exciting new areas of cancer treatment, to come to market.”

Growth platform drugs compared to legacy products like Crestor also contributed to over half of the company’s sales, and Tempus highlighted the group will be submitting six nw drugs for authorities and will have updates on 10 more.

It recommended the shares at ‘buy’, saying the income will be sufficient to keep investors happy through the “trough” years.