In Tuesday's IBD Screen of the Day, the focus is on top stocks that have hit new highs on their relative strength lines. Big pharma leader AstraZeneca popped up among the 98 top-rated stocks. Coincidentally, AstraZeneca stock has broken out of a double-bottom entry.
Its relative strength line hit new highs, as shown in the weekly MarketSmith chart.
AstraZeneca reported earnings on Nov. 10, leaning on cancer and diabetes drugs in the third quarter to achieve double-digit sales growth and a strong earnings beat.
Lee Brown, lead analyst for health care at research firm Third Bridge, said the strong report "was driven by success across its franchises." The company's cancer drugs, Calquence and Imfinzi, put up strong performances, growing a respective 60% and 19% on a strict, as-reported basis. Meanwhile, sales of diabetes treatment Farxiga rocketed 38%.
Farxiga "continues to enjoy volume growing faster than the overall (drug class) market, as well as benefiting from uptake for the treatment of heart failure and chronic kidney disease," Brown said in a report to clients.
The stock broke past its buy point of 68.49 on Dec. 2 from a double-bottom base. The base initially started forming when it hit an all-time peak of 71.70 in April.
AstraZeneca Stock Core Earnings Skyrocket
Overall, Q3 core earnings for the U.K.-based pharmaceutical company grew 55% year over year to $1.67 per share. Total revenue rose 11% to $10.98 billion. In constant currency, earnings advanced 70% and sales jumped 19%.
Part of the strong growth stems from the acquisition of Alexion Pharmaceuticals, maker of rare-disease drug Soliris. Though Soliris sales fell 13% during the quarter, they still added $901 million to the company's top line.
Cancer drug Calquence brought in $566 million in sales. Sales of the company's biggest moneymaker, a cancer drug called Tagrisso, grew 12% to nearly $3.8 billion.
Outside of cancer treatments, Farxiga brought in $1.1 billion.
Analysts surveyed by FactSet expect AstraZeneca to earn 71 cents a share in the fourth quarter on sales of $11.36 billion. In Q4 of 2021, the company earned 85 cents a share on $12.011 billion.
AstraZeneca raised its earnings guidance for the year. It now expects core earnings to grow by a high-20% to low-30% range vs. the previous outlook for a mid-to-high 20% increase. The firm kept its outlook for revenue to increase by a low-20% range.
AstraZeneca stock earns the No. 1 rank among its peers in the Medical-Diversified industry group, according to IBD Stock Checkup. Eli Lilly, Danaher, and Johnson & Johnson are the next ranked stocks within that group.
Finding Top Stocks
The relative strength line compares a stock's price action to that of the S&P 500. A rising line tells you it's outperforming the benchmark index while a falling line denotes growing weakness.
With thousands of names to choose from, how can you efficiently find the top stocks like AstraZeneca stock to buy and watch? For starters, zero in on top growth stocks that fit your criteria with IBD Stock Screener.
And investors can build their own screens from scratch, or start with IBD stock lists, especially the IBD 50, Sector Leaders, Big Cap 20 and IPO Leaders.
Follow Michael Molinski on Twitter @IMmolinski
