The lacklustre performance since the management of AstraZeneca knocked backed Pfizer’s 2014 takeover approach continues to bring that decision into question, Patel explained.
“Long suffering investors of AstraZeneca will have to wait longer for positive news after disappointing Q4 results,” he said. “The decision by management to rebuff Pfizer’s premium bid in 2014 will be questioned again following three years of earnings decline. The current share price is 25% lower than the Pfizer bid. Management’s guidance on 2017 as a defining year will not provide much comfort to shareholders who have seen the share price underperform the FTSE 100 by over 20% over the last 12 months.”
AstraZeneca said on Thursday it had recorded a 5% fall in revenues for 2016 as a whole, with core operating profit down 7% to $6.72bn and core earnings per share down 5% at $4.31.
Shares in the drug maker slipped 1.2% in response to sit at 4194p by mid-morning.
Patel also gave a nod to AstraZeneca rival GlaxoSmithKline as an example of what can be delivered for shareholders by large pharmaceutical companies.
“In contrast, its UK rival GlaxoSmithKline has outperformed the large cap index over the same period. The decision to keep to a progressive dividend policy will provide a floor to the share price in the near term. Both UK pharma giants are offering a dividend yield in excess of 5%, but long-term investors will want to see meaningful progress in 2017 in the pipeline to stay the course.”
