Leading shares slip back after Wall Street decline on Fed fears and US results
With markets under the cosh in early trading, pharmaceuticals group AstraZeneca is a notable exception.
The company said it was likely to return to growth faster than analysts had expected. It has been suffering from a number of key drugs losing patent protection amid concerns about its future pipeline.
But in a presentation due to be given at a JP Morgan healthcare conference later, chief executive Pascal Sonot will say:
AstraZeneca has made good progress in accelerating and replenishing its portfolio in its three core therapeutic areas. [Its] late stage pipeline now comprises 11 phase 111 programmes, almost double the number of programmes a year ago, and 27 phase 11 programmes.
Following the acquisition of Bristol-Myers Squibb's interests in the companies diabetes alliance...and as the alliance's pipeline of new products is progressively launched, AstraZeneca continues to believe a return to growth should come earlier that analyst consensus currently forecasts.
AstraZeneca now expects 2017 revenues to be broadly in line with 2013 revenues.
AstraZeneca's shares have added 79p to 3742.5p, but Savvas Neophytou at Panmure Gordon was not convinced, repeating his sell rating:
The strong outperformance of recent months can now be quantified, with management providing long-term guidance to 2017 "revenues to be broadly in line with 2013"; implying some $3.3bn upgrades to consensus (currently stands at $22.4bn).
In our view, management is stepping onto thin ice with this same sort of guidance already attempted – and failed – this decade by previous management. We assume the upgrade can only be derived from the pipeline (according to consensus currently due to contribute some $1.4bn). In our view, a step-change from $1.4bn to $4.7bn from the pipeline is aggressive and management may be setting itself up for a fall. We have been sellers of the stock – and wrong – since November 2013 as we are not ready to take on pipeline risk in this name yet and therefore re-iterate our overall sell recommendation.
Overall the FTSE 100 has fallen 35.22 points to 6721.93, following a late sell off on Wall Street overnight. Comments from Federal Reserve members that it could continuing trimming its $75bn a month bond buying programme despite poor jobs data last week knocked sentiment, while investors were also nervous about the current US reporting season. On top of that Japan's current account deficit came in higher than expected.
Financial groups were among the leading fallers, with Schroders down 62p at £25.28 and Aberdeen Asset Management 9.5p lower at 450.4p.
But BSkyB has climbed 30p to 869.5p despite news that the EU was investigating licensing arrangements between US film studios and pay-TV firms. The satellite broadcaster was lifted by UBS raising its rating from neutral to buy.
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