AstraZeneca shares are up 3% at 13,450p this morning, with Jefferies arguing the third-quarter numbers were better than the headline suggests.
The broker, which rates the stock a Buy with a 17,500p target, 34% above the prior close of 13,052p, said the beat was of good quality.
Core operating profit of $5.86 billion was 8% ahead of consensus and 5% ahead of Jefferies' own forecast, while core earnings per share of $2.79 beat consensus by 7%.
Revenue was only 1% ahead of consensus, so the profit beat came largely from costs. Core R&D and SG&A both came in about 2% to 3% below consensus, and other operating income of $277 million was double expectations.
Jefferies flagged that some of the cost saving may be timing, because R&D spending usually steps up in the fourth quarter.
The core operating margin of 36.1% was about 230 basis points above consensus, and Jefferies argues this bodes well for the 2027 margin trajectory. Margin development beyond 2026 is its first question for the management call.
On the top line, Tagrisso beat consensus by 4% and Imfinzi by 1%, while alliance revenue, which includes Enhertu and Tezspire, was 8% ahead.
There were misses. Truqap came in 17% below consensus and Soliris 14% below.
Guidance was unchanged. Jefferies says consensus revenue of $63.3 billion sits below the mid-point of the mid-to-high single-digit growth range, which implies $63.5 billion to $65.3 billion, leaving scope for upgrades. Its own forecasts are $63.6 billion of revenue and core earnings per share of $10.41, against consensus of $10.27.
The broker also pointed to management's claim that 2027 readouts carry $20 billion-plus of potential, and said it wants more confidence in the 2027 catalyst route, particularly in cardiovascular, renal and metabolism.
Among the pipeline setbacks it listed were the discontinued Ultomiris AWAKE trial, the end of a Wainua combination study and the removal of four early-stage drugs.
