Today's Top Health Care Stocks to Watch: AstraZeneca plc, Alexion Pharmaceuticals, Celgene Corporation and Novartis AG

Today's top stories in biotech and health care.

Apr 24, 2014 at 8:39AM


Let's take a look at today's top stories in biotech and health care. Keep an eye out for AstraZeneca (NYSE:AZN), Alexion Pharmaceuticals (NASDAQ:ALXN), Celgene Corporation (NASDAQ:CELG) and Novartis AG (NYSE:NVS)

Alexion Pharmaceuticals easily beats earnings estimates 
Alexion Pharmaceuticals reported earnings per share of $1.53 on net product sales of $567 million this morning. As a reminder, consensus was $1.26 per share on $560 million in sales for the first quarter -- so this is a decent beat, especially in terms of earnings. What drove this beat, for the most part, was a 41% increase in year over year sales for its flagship blood disorder drug Soliris.

In something of a surprise, Alexion also increased its 2014 guidance today, which is the second time in the last two months. Last March, Alexion increased the upper bound for 2014 revenue to $2.17 billion. In today's release, the company is now projecting that annual revenue could grow up to $2.28 billion in 2014. You should therefore definitely keep tabs on Alexion today after this strong earnings release. 

AstraZeneca misses on earnings, beats on revenue
Struggling pharma giant AstraZeneca reported earnings per share this morning of $1.17, missing consensus by $0.06. Revenue quarter over quarter came in at $6.42 billion, which actually beat consensus estimates by $100 million. The company also reaffirmed its bleak 2014 guidance, saying that revenue will continue to fall throughout the year as more products like Crestor and Nexium come off of patent protection. Despite an unimpressive earnings report, AstraZeneca shares are up over 5% in premarket trading this morning, presumably because investors believe the company is an attractive takeover target after the recent rumors that Pfizer was interested in making a bid. Even so, you should keep in mind that AstraZeneca reportedly rebuffed Pfizer's offer, and the company's revenue stream isn't expected to stabilize until at least 2017.

Celgene reports before the bell today
Celgene will report first quarter earnings at 9 a.m. E.T. today. Investors are keen to see if the company can bounce back from its fourth quarter earnings miss last January and if the company will increase 2014 guidance, after providing what many believed to be a "conservative" outlook earlier. Since missing earnings earlier this year, Celgene shares have fallen over 14% year to date, so today's report is certain to be a closely watched event. Here's what to expect: consensus estimates for earnings per share are $1.65 and revenue is 1.77 billion. You should keep a close watch on sales growth for its top cancer drugs Abraxane and Revlimid, and any early sales info for its newly launched psoriatic arthritis drug Otezla.     

Novartis misses misses consensus on earnings
Swiss pharma Novartis reported earnings per share of $1.31 today, narrowly missing consensus estimates by $0.02. Novartis missed estimates largely because of a strong Swiss franc combined with weakness in currencies in certain emerging markets. For the quarter, Novartis posted 17% growth in the sale of its "growth products" over the prior quarter; the company defines growth products as "drugs approved from 2008 onward" and include Gilenya, Afinitor, Tasigna, Galvus, Lucentis and Xolair. All told, growth products contributed 31% to net sales in the quarter. Novartis's shares are down over 1% in premarket trading this morning. 

Novartis also provided a strategy update stemming from its recent deals with GlaxoSmithKline and Eli Lilly. Specifically, the company said these deals will help boost operating margin and income for its consumer health care and pharmaceutical products within a year of closing this deal. As a refresher, Novartis sold its vaccine program (excluding flu) to GlaxoSmithKline, and purchased the latter's oncology unit. Novartis also sold its animal health unit to Eli Lilly in a separate deal.

Overall, I think this earnings release helps to clarify why Norvartis made these megadeals. Specifically, the company appears to want to focus on higher margin products such as cancer treatments moving forward. You should thus pay close attention to Novartis' net profits in the upcoming quarters to see if this strategy pans out, once this deal closes.  

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George Budwell has no position in any stocks mentioned. The Motley Fool recommends Celgene. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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