NEW YORK (TheStreet) -- AstraZeneca Plc (AZN - Get Report) agreed to buy the rights to a portfolio of inhaled drugs from Almirall (LBTSF) in a deal worth up to $2.1 billion, a significant step toward expanding its respiratory business and the type of pipeline-boosting deal favored by CEO Pascal Soriot, the Wall Street Journal reports.
The deal will give the U.K. drug maker a type of treatment for chronic obstructive pulmonary disease which it currently lacks, a new type of inhaler and a portfolio of pipeline drugs, potentially helping it compete better with rivals such as respiratory-market leader GlaxoSmithKline (GSK - Get Report), the Journal said.
AstraZeneca's asthma treatment Symbicort has been gaining market share in the U.S. from Glaxo's Advair.
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The Almirall deal will also help AstraZeneca's revenue, now forecast to decline between this year and 2017.
Shares of AstraZenecaa are up 0.92% to $73.78 in pre-market trade.
TheStreet Ratings team rates ASTRAZENECA PLC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate ASTRAZENECA PLC (AZN) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, expanding profit margins and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- AZN's revenue growth has slightly outpaced the industry average of 6.3%. Since the same quarter one year prior, revenues slightly increased by 0.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The current debt-to-equity ratio, 0.48, is low and is below the industry average, implying that there has been successful management of debt levels.
- The gross profit margin for ASTRAZENECA PLC is currently very high, coming in at 90.79%. It has increased significantly from the same period last year. Despite the strong results of the gross profit margin, AZN's net profit margin of 7.66% significantly trails the industry average.
- Compared to its closing price of one year ago, AZN's share price has jumped by 47.41%, exceeding the performance of the broader market during that same time frame. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- ASTRAZENECA PLC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, ASTRAZENECA PLC reported lower earnings of $2.04 versus $4.94 in the prior year. This year, the market expects an improvement in earnings ($4.29 versus $2.04).
- You can view the full analysis from the report here: AZN Ratings Report