AZN Aims for $80 Billion in Revenue by 2030?
In May 2014, $AstraZeneca PLC(AZN)$ , the world's sixth-largest pharmaceutical company by market capitalization, set itself a lofty goal: to surpass $45 billion in annual revenue by 2023.
Wall Street was skeptical, calling it overly optimistic. But guess what? AstraZeneca actually hit that milestone, and over the past decade, its total return, including dividends, has outpaced the $S&P 500(.SPX)$ .
Now, let's fast-forward to May 21, 2024. During an investor conference, AstraZeneca drops a bombshell: they aim to hit $80 billion in sales by 2030, a whopping 30% higher than Wall Street's predictions.
Just like 10 years ago, some analysts are skeptical, wondering if this pharma giant can really achieve such a rosy long-term revenue target.
But here's the kicker: AstraZeneca might just do it. Despite facing patent cliffs with drugs like Lynparza, Soliris, and Farxiga, the company's got a plan. Their robust pipeline of innovative drugs, including Ultomiris for rare blood diseases and cancer drugs like Imfinzi, Imjudo, and Enhertu, is expected to add nearly $8 billion in sales by 2030.
And just look at their R&D spending. In 2023, it accounted for almost 24% of their total revenue. These investments are paving the way for a slew of new cancer antibody-drug conjugates, gene therapies for rare diseases, and competitive weight-loss drugs.
In addition, AstraZeneca recently announced a 7% dividend hike, giving it a forward dividend yield of around 4%, which is at the top of the industry and way above the S&P 500's average of 1.35%.
And further companies with dividend growth rates consistently above 6% tend to outperform over 5-10 years. This dividend hike is a clear signal that AstraZeneca's operations and finances are in great shape.
Not many stocks can outperform the S&P 500 in the long run, especially in the pharma sector. But AstraZeneca is the exception. They've proven that their business model of creating value through innovation works.
Even with the prospect of losing patent protection, their management team is still saying that revenue will grow 77% in the next six years.
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