Final Results

AstraZeneca reported FY2025 total revenue of $58,739m, up 8% at constant exchange rates, product sales $55,573m (+9% CER), reported EPS $6.60 (+45%) and core EPS $9.16 (+11% CER); Q4 total revenue was $15,503m (+2% CER) with core EPS $2.12. The board declared a second interim dividend of $2.17/share (total FY dividend $3.20, +3%) and issued FY2026 guidance of mid-to-high single-digit Total Revenue growth and low double-digit Core EPS growth at CER. Management flagged strong pipeline delivery (16 positive Phase 3 readouts, 43 major approvals), strategic deals and acquisitions (including Modella AI, Jacobio and CSPC agreements), a $15bn China investment plan through 2030 and harmonised NYSE listing — factors that support continued commercial momentum and investor access.

Analysis

Market structure: AstraZeneca (AZN) is the clear winner — FY25 revenue +8% CER and guidance for mid-to-high single‑digit revenue growth and low‑double‑digit core EPS growth imply sustained pricing power across Oncology, CVRM and Rare Disease. Upfront deals (Jacobio, CSPC) and $15bn China capex increase AZN’s addressable market and manufacturing scale, pressuring smaller specialty players' long‑term margins. Short-term winners also include CMOs and Chinese biotech partners; rivals in GLP‑1/weight management (incumbents like NVO/LLY) face intensified competition from CSPC programmes now partnered with AZN.

Risk assessment: Tail risks include material Phase‑3 failures (LATIFY example) or a regulatory pricing shock in the US/EU; two or more high‑value trial failures within 12 months could knock >15–25% off AZN. Near term (days–weeks) risks are sentiment moves around NYSE listing and Q1 results (29 Apr 2026); medium term (3–12 months) depends on ~20 Phase‑3 readouts and major regulatory filings; long term (1–5 years) execution on $15bn China build and AI integration is critical. Hidden dependency: recent royalty buyouts and milestone payments front‑load cash outflows and compress gross margin volatility despite higher future share of sales.

Trade implications: Core trade — establish a 2–3% long AZN equity position targeting a 12‑month return of 15–25%, funded by trimming 1–2% exposure to early‑stage biotech/GLP‑1 small caps. Use options: buy 9–15 month AZN LEAPS ~15–25% OTM (or a 15% OTM long/35% OTM short call spread) to capture catalyst upside while limiting premium. Pair trade: long AZN vs short BMY (1–1.5% net) as relative‑value — AZN has denser near‑term regulatory/catalyst cadence; hedge with 3–6 month puts if two negative readouts occur.

Contrarian angles: The market underweights integration and execution risk from large China capex and multiple M&A payouts — expect near‑term dilution of free cashflow if capex/milestone timing slips, which could be a 5–10% downside catalyst. Conversely, consensus may underappreciate upside from Modella AI embedding into R&D (probability of accelerated Phase‑3 success could lift pipeline value by mid‑teens over 24 months). Historical parallel: large pharma AI/tech integrations show binary outcomes — position sizing should reflect asymmetric payoff and event clustering across 6–18 months.

Key Decisions for Investors

• Establish a 2–3% portfolio long position in AZN (AstraZeneca) equity within 1–2 weeks, target 12‑month upside 15–25%; set a stop‑loss at -12% and take profits if position >+20% before 12 months.
• Buy 9–15 month AZN call LEAPS ~15–25% OTM (or execute a 15% OTM long / 35% OTM short call spread) sized to synthesize a 1% portfolio exposure to leverage catalyst upside while limiting premium.
• Execute a pair trade: long AZN 2% vs short BMY 1–1.5% as relative value over 6–12 months; reassess after Q1 results (29 Apr 2026) and any major Phase‑3 readouts — trim if AZN misses guidance or two high‑value trial failures occur.
• Reduce exposure to early‑stage biotech/GLP‑1 small caps by 2–4% and reallocate into large‑cap pharma (AZN) and defensive healthcare names; this hedges execution risk and captures AZN’s diversified revenue base.
• Monitor these specific catalysts over next 12 months and act: (1) >20 Phase‑3 readouts (watch first 6 months closely), (2) regulatory decisions for Datroway/DESTINY filings, (3) any announced delays/overrun on $15bn China capex — if two or more negative signals materialize, cut AZN exposure by 50% within 5 trading days.