AstraZeneca PLC, Gilead Sciences and Galena Biopharma Could Be Today's Biggest Movers in Healthcarehttp://www.fool.com/investing/general/2014/02/06/astrazeneca-plc-could-be-todays-biggest-movers-in.aspx George Budwell
February 6, 2014
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
Good morning, fellow Foolish investors! Let's check in on the top stories in health care this morning.
AstraZeneca falling on hard times
As a refresher, AstraZeneca's revenues have been falling for a while now as they've lost patent protection for key drugs in their commercial portfolio. So, this isn't a new or unexpected turn of events.
What is new is the company's worse than expected guidance for 2014 and beyond. Revenues are expected to drop by double-digits percentage-wise, as additional drugs like Crestor and Nexium come off of patent protection. In short, revenues aren't expected return to 2013 levels until at least 2017.
If there was a silver lining in today's earnings release, it was AstraZeneca's decision to keep paying a dividend of $1.90. However, the company will not restart its 2012 share buyback program, choosing instead to focus on putting cash to work in its clinical pipeline.
And that's where AstraZeneca is seeking redemption. AstraZeneca has 11 new late-stage clinical candidates compared to a year ago, and another 19 experimental drugs that could enter late-stage trials soon. So, their pipeline does hold promise for turning things around.
That said, investors might want to pass on AstraZeneca for now. There are several other large pharmas and biotechs that offer smoother sailing for the time being.
Gilead on the rebound?
Despite beating analysts' earnings per share estimates by 5%, the market clearly wanted to know if Sovaldi is the world beater it's being billed as by many experts on Wall Street. With the benefit of a day to digest the lack of guidance, the market is warming up to Gilead again, with shares rebounding over 1% in premarket this morning.
What's key to understand is that even without Sovaldi sales, Gilead shares are still only trading at about 10 times annual revenues. Put simply, Sovaldi's sales should help to boost share price over the long run, even if AbbVie's competing hep C drug is approved later this year. Investors with a long-term outlook may want to keep tabs on Gilead going forward.