AstraZeneca PLC

AstraZeneca PLC (AZN) is a biopharmaceutical company and is engaged in the development and commercialization of prescription medicines. Currently, the company is a member of the FTSE 100 index.

On 14^th February 2020, the company will announce the full-year 2019 results.

On 8^th November 2019, the company submitted the results from the Phase III ROCKIES, and OLYMPUS trials show that roxadustat substantially surged haemoglobin levels in DD (dialysis-dependent) and NDD (non-dialysis-dependent) patients with anaemia from CKD (chronic kidney disease).

On 6^th November 2019,the company will present the initial data from the Phase III ELEVATE-TN trial evaluating Calquence in patients with earlier untreated CLL (chronic lymphocytic leukaemia), and also a data from novel-combination trials over numerous blood cancers at the ASH (American Society of Hematology) Annual Meeting 2019 and Exposition in Orlando, the United States on December 7-10, 2019.

Financial Highlights (Year-to-date and Q3 2019)
On 24th October 2019, the group announced its results for the third quarter and nine months ended September 30, 2019. The group reported the product sales surged by 13 per cent year on year for the nine months ended 30th September 2019 at US$17.315 billion. The third-quarter product sales stood at US$6.132 billion, up by 16 per cent year on year. This led to a year on year total revenue growth of 20 per cent in the Q3 FY2019 at US$6.406 billion and a 13 per cent year on year surge in the total revenue for the Year to date at US$17.720 billion. The company reported earnings per share at US$0.79 per share for the year to date, based on a weighted-average number of shares of 1.297 billion, reflecting a decrease of 11 per cent year on year. The group has been able to achieve one new molecular entity approval in the trailing quarter.

Share Price Performance

Daily Chart as at November-11-19, before the market closed (Source: Thomson Reuters)

On 11^th November 2019, AstraZeneca PLC shares were trading at GBX 7,197 at the time of writing before the market close (at 1:15 PM GMT), down by 1.099% against the previous day closing price. Stock's 52 weeks High and Low are GBX 8,277.88/GBX 5,312. The company's stock beta was 0.80, reflecting the lower volatility as compared to the benchmark index.

Conclusion
Over the last four years, the net income after tax of the company has increased at a CAGR of 13.51 per cent while operating income has grown at a CAGR of 12.2 per cent, indicating a strong growth.The group reported robust top-line and bottom-line performance with a solid balance sheet. In the third quarter of 2019, the group has demonstrated good operating-margin improvement, as its core operating profit also surged during the current year. In the financial year 2019, the cash performance is anticipated to consist of numerous payments relating to prior business development transactions and most of the value of these payments in the current year was resolved in the H1 FY2019. Capital expenditure is projected to be roughly stable and restructuring expenses will decrease against the previous year. The core tax rate will be in the array of 20% - 22% in FY19.  Product Sales are now anticipated to surge by a low to mid-teens percentage. The company reiterates its Core EPS guidance will be in the range of $3.50-$3.70 over the full year.

Based on the above rationale, we have given a “Hold” recommendation at the current price of GBX 7,197 (as on 11th November 2019, before the market close).
 

Scottish Mortgage Investment Trust PLC

Scottish Mortgage Investment Trust PLC (SMT) is a closed-end investment company and incorporated in the United Kingdom. The objective of the Fund is to maximize the total return to investors at the same time as generating real dividend growth through a diversified portfolio. The Fund invests internationally, primarily in quoted securities. The company’s portfolio is concentrated in a relatively small number of holdings.

Financial Highlights (for the six months to 30 September 2019)
Since the end of March 2019, the net asset value per share, with debt at fair value (NAV), increased but only by 3.2 per cent as compared with 9.9 per cent for the FTSE All-World Index. The company’s longer-term performance stays good. Over the five years, the net asset value has gained 137.5 per cent against the 86.5 per cent and over 10 years, it has surged by 415.1 per cent against the 204.4 per cent. Although investors are well-aware that the emphasis is on the generation of long-term appreciation in the capital values and the company is aware that a small but consistent dividend is of value to many shareholders. The group’s board proposed an interim dividend per share of 1.39 pence. This is despite an 18.5 per cent fall in the earnings.

Share Price Performance

Daily Chart as at November-11-19, before the market closed (Source: Thomson Reuters)

On 11^th November 2019, Scottish Mortgage Investment Trust PLC shares were trading at GBX 516.50 at the time of writing before the market close (at 2:03 PM GMT), down by 0.673 per cent against the previous day closing price. Stock's 52 weeks High and Low are GBX 568.50/GBX 440.14. The company's stock beta was 1.04, reflecting almost the same volatility as compared to the benchmark index.

Conclusion
Scottish Mortgage Investment Trust PLC is emphatically optimistic about the underlying and aggregate progress of the portfolio.Political and economic uncertainty due to Brexit negotiations could have a negative effect on the financials and target market of the company. Moreover, the company’s stock is trading near a 52-week high, raising doubts at its upside potential at the current price level.

Also, at the current trading level, the 14-day Relative Strength Index of its shares was hovering in the significant overbought zone.

Therefore, based on the above rationale, we have given a “Watch” recommendation at the closing price of GBX 520 (as on November 08, 2019), while we look for any upcoming catalysts in the near term.

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