February 14, 2020 / 7:17 AM / 6 days ago

AstraZeneca 2020 forecasts hit by coronavirus, shares dive

(Reuters) - British drugmaker AstraZeneca (AZN.L) forecast revenue growth for this year of around 10% on Friday, as it factored in a hit from the coronavirus outbreak in China and fell short of analysts’ expectations for fourth-quarter results.

FILE PHOTO: The company logo for pharmaceutical company AstraZeneca is displayed on a screen on the floor at the New York Stock Exchange, U.S., April 8, 2019. REUTERS/Brendan McDermid/File Photo

Shares of the company, moving into a third year of growth after changes driven by Chief Executive Officer Pascal Soriot, sank 5% on Britain's blue-chip index .FTSE as it warned that the hit from the outbreak could last "a few months".

China was again a central driver for the company in the final quarter of 2019, with sales in the country growing 28% to $1.19 billion, making up 19% of total product sales in the period.

Sales from the company’s top-selling cancer drug Tagrisso, however, missed estimates as it faced inventory issues in its biggest market in the United States.

The 2020 forecast was broadly in line with expectations, although some analysts have said anything less than double-digit sales growth would be a disappointment this year.

“Management guidance will disappoint (although) we would flag that AstraZeneca has attempted to quantify the impact of COVID-19 in its guidance, with other large pharma (e.g. GSK) excluding this impact,” Shore Capital analysts said.

Last week, British rival GSK (GSK.L) said it had not faced much disruption in the short term to its supply chain, but was monitoring the situation.

AstraZeneca said it expects total revenue to grow by a high single-digit to a low double-digit percentage in the year, depending on the impact of the epidemic, and core earnings per share to rise by a mid- to high-teens percentage.

The company had already warned sales growth from China would slow down due to changes in government policy and growing competition.

The coronavirus, which has killed over 1,300 people, has continued to spread this week, with Chinese health authorities on Friday reporting more than 5,000 new cases.

Credit Suisse, in a note ahead of the results, said it expected a sales growth forecast in the high-single-digits before factoring in any coronavirus impact.

Jefferies analysts said revenue forecast may disappoint, albeit the outlook assumes up to a few months unfavorable impact of coronovirus in China.

Quarterly product sales of $6.25 billion missed analysts’ expectation of $6.31 billion, according to a company provided consensus of 20 analysts.

Reporting by Pushkala Aripaka, Ankur Banerjee in Bengaluru and Ludwig Burger in London; editing by Patrick Graham

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