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AstraZeneca Beats Forecasts, Raises Year Guidance

Drugmaker AstraZeneca, helped by currency effects and cost savings, raised its full-year earnings forecasts on Thursday as third-quarter forecasts beat expectations.

Shares in the company were 5.2 percent higher at 25.50 pounds.

The results follow solid figures earlier this month from European rivals GlaxoSmithKline, Novartis and Roche as sales of medicines hold up relatively well in a worsening economic environment.

In a move similar to Glaxo, AstraZeneca said it was suspending share repurchases for the rest of 2008 to take advantage of investment opportunities.

Many cash-rich drug firms see the credit crisis as a chance to buy up assets cheaply.

Chief Financial Officer Simon Lowth told reporters the Anglo-Swedish group would actively pursue opportunities to buy promising compounds to bulk up its new drug pipeline via product licensing deals and acquisitions.

Cholesterol fighter Crestor and asthma drug Symbicort showed strong growth in the quarter, offsetting a fall in sales of ulcer and heartburn treatment Nexium, which faces fierce competition from cheaper rivals.

The fall in Nexium sales, however, was slightly less than some analysts had feared.

Sales of schizophrenia drug Seroquel showed only modest growth, as expected, reflecting a tough year-ago comparison.

For the full year, AstraZeneca now expects core earnings per share of between $4.90 and $5.05, against $4.60-4.90 anticipated previously, helped by dollar and sterling weakness in the third quarter, as well as operational improvements.

Currency Swings

Some of those currency advantages may start to unravel in future quarters, following more recent currency swings, but most analyst numbers were already above the previous guidance.

"The fourth quarter is not going to be as strong; they're not going to get as much currency benefits," said WestLB analyst Simon Mather. "So I think this guidance is what they will achieve."

CNBC.com

Morgan Stanley analysts said 2008 consensus estimates were likely to rise by 2 to 6 percent and predicted the company would at least meet, or beat, forecasts for the next five quarters.

Reported pretax profit in the quarter rose 29 percent to $2.44 billion on sales up 9 percent at $7.78 billion, equivalent to core EPS of $1.32 versus analyst expectations of $1.17.

"Core" earnings exclude restructuring costs and charges.

Sales in emerging markets were up strongly in the three months to Sept. 30 at $1.1 billion -- the second successive quarter in which revenues in have breached $1 billion.

AstraZeneca shares have performed strongly since March, outpacing the European sector by around 30 percent, as the company has successfully seen off the immediate threat of generic competition to Nexium and Seroquel.

Investors are also hopeful that new clinical trial data on Crestor, due to be presented at the annual meeting of the American Heart Association next month, will help differentiate the medicine in a crowded cholesterol market.

But the shares still trade on a lowly 8.25 times forecast 2009 earnings -- below British rival GlaxoSmithKline on nearly 11 times -- reflecting investor concern about the company's relatively thin late-stage drug pipeline.