Vaccine rollout could give AstraZeneca shares a shot in the arm … and 2 Oz small caps to watch

By Jonathan Jackson. Published at Feb 12, 2021, in Features

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As Australia prepares to roll out its first COVID-19 vaccine, (and the citizens of Melbourne enter lockdown 4.0) it’s worth looking at the impact the roll-out will have on its maker – AstraZeneca.

The $95BN capped Anglo-Swedish pharmaceutical giant this week reported product sales growth of 10% in 2020, much of that on the back of its development of a coronavirus vaccine.

Product sales totalled $25.8 billion for the year, with fourth quarter sales rising 12% to just over $7 billion.

Total revenue was $26.6 billion for the year, and at $7.4 billion for the fourth quarter.

CEO Pascal Soriot said last year’s performance “marked a significant step forward for AstraZeneca. Despite the significant impact from the pandemic, we delivered double-digit revenue growth.”

“The consistent achievements in the pipeline, the accelerating performance of our business and the progress of the COVID-19 vaccine demonstrated what we can achieve.”

Adam Vettese, analyst at multi-asset investment platform eToro, says of the results, “AstraZeneca has become one of the main drivers of growth in the pharmaceutical market in recent years and the pandemic hasn’t changed that.

“Strong product sales and a decent looking pipeline should see the drugs giant to double-digit revenue growth for the coming financial year as predicted.”

The London Stock Exchange listed company expects revenue growth of a “low-teens percentage” in 2021.

Full-year dividend was unchanged at $2.80 per share, however the company forecast “core” earnings per share to range from $4.75 to $5 this year.

AstraZeneca has reported that this guidance does not incorporate any revenue or profit impact from sales of the Covid vaccine. It should be noted AstraZeneca will provide access to its vaccine at no profit for the “duration of the pandemic”.

“Perhaps to the disappointment of shareholders, there was precious little in Astra’s results about the thing they wanted to hear most about: its Covid-19 vaccine,” Vettese said.

“Astra has pledged not to profit on the vaccine ‘during the pandemic’, meaning it will provide it on a cost basis as long as the pandemic lasts.”

Interestingly, the company’s share price performance has been underwhelming trading at 10-month lows, and currently sitting around 7,300p. It is down 15% over the last three months.

However, with its full-year results showing a healthy rise in profits and sales, investors will hope to see some improvement in the AstraZeneca share price.

Roll out will also play a role

There is high reliance on this vaccine, with the UK and EU placing a whole deal of faith on it to bring their out of control strains under control.

The UK rolled the vaccine out in January. It is one of the more popular vaccines despite lower efficacy rates than vaccines being delivered by Pfizer and Moderna. Its popularity stems from its low cost, easy storage and easy transport.

A rapid rollout is thus achievable and is seen as crucial to the reopening of economies severely damaged by lockdowns and job losses.

This is despite, South Africa abandoning the vaccine amid concerns that it had limited efficacy against a variant of the virus that has emerged there.

Yet, independent experts advising the World Health Organization have recommended the use of Oxford AstraZeneca’s vaccine, even in countries where there are variants.

This has put Australia’s medical bodies and advisors at ease as well, especially as CSL begins to bottle the jab for distribution.

The first doses of the Oxford AstraZeneca vaccine, which is being manufactured in Melbourne, are on track for release in March.

"We start our last phase of production on Monday in terms of getting those really important doses into vials and ready for final roll-out," General Manager of Seqirus, a CSL company, Stephen Marlow told the Today show on Friday morning.

2 ASX stocks to watch

Minbos Resources (ASX: MNB)

Minbos came out swinging this week and had a good week for it.

MNB is developing a phosphate (fertiliser) project in Angola with a 6 million tonne mining target and a 21 year mine life.

The company is also working with the International Fertilizer Development Centre to develop education programs to small holder farmers, utilising its phosphate fertiliser to increase crop yields.

This week, the company alerted the market to the fact phosphate prices are surging. In fat prices have more than doubled in just over 12 months from US $248 /tonne to US $497 /tonne.

According to MNB’s calculations on project sensitivity to phosphate price, if this price trend continues to $643 / tonne then the company’s After Tax NPV will increase to $343.7M (from a $25M capex).

Not bad for a $27M market capped company.

Minbos also announced adoption of a global ESG reporting standard.

Minbis has several ESG goals in sub-Saharan Africa including improving food security and nutrition, decreasing levels of poverty and mitigating the impacts of climate change on farmers.

ESG investment is now a growing trend a mong investors and it is likely that early adopters of these higher standards will likely reap rewards.

Minbos started the week at 9 cents, hit a high of 10.5 cents, before settling around 9.8 cents on Friday afternoon.

Read: MNB Adopts Global ESG Standard while Phosphate Prices Surge

Pursuit Minerals (ASX: PUR)

While it didn’t set the world on fire this week, PUR still rose from 3.2 cents to 3.4 cents this week. It settled back down to its original starting price, but with news to come, we should see its price lift further in the near future.

The commencement of Stage 1 of a new Airborne Electromagnetic (AEM) survey on its Warrior PGE-Nickel Project, covering 1,715kms over the Calingiri East, Calingiri West, Wubin and Wubin South exploration licences.

The AEM survey will commence flying next week and should be completed in early March.

PUR’s ground is located approximately 20-170km north and northeast of Chalice Mining’s Gonneville PGE-Nickel-Copper discovery on the Julimar Project.

Chalice’s discovery was Australia’s first major palladium discovery, in an entirely new minerals province and is shaping up to be a major deposit of critical metals for a clean energy future and includes palladium, nickel and copper.

Since CHN’s discovery, PUR has taken up most of the ground in the province, leaving limited options for other companies to take a position and giving it the most leverage.

The best and worst performing sectors this week?

Materials is the best performer up over 2 per cent followed by Communication Services up over 1 per cent while Information Technology is up just under 1 per cent. The worst performing sectors include Industrials down over 2 per cent followed by Utilities down over 1 per cent and Consumer Discretionary, which is just in the red so far this week.

The best performers in the ASX/S&P top 100 stocks include Macquarie Group up over 8 per cent after releasing a good report during reporting season. IAG is also up over 8 per cent this week while Orora is up over 6 per cent. The worst performers include AMP, which is down over 13 per cent after Ares Management backed out of their $4.9B bid for the company. Challenger also fell heavily down over 11 per cent while Boral is down over 7 per cent.

So what's next for the Australian share market?

Wealth Within’s Dale Gillham says, “Right now, it seems that every week there are surprises in the market and this week has been no exception with reporting season now under way.

“While the Australian market was up strongly earlier in the week, it has since shown weakness. Where the All-Ordinaries Index closes today will be interesting and a sign of what to expect in the coming weeks.

“A strong close on Friday will suggest further rises over the next two to four weeks, while a weak close will indicate further downside. For now, it is best to play the waiting game rather than second-guess which way the market will trend. While the market may be a little unpredictable right now, I am confident that it will settle and trade higher over the next couple of months to achieve a new all-time high.

“Given this, I encourage everyone to continue to be patient while we wait for the market to confirm a direction.”

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