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Tickers in this Article: AZN
AstraZeneca (AZN) recently announced that it has completed the sale of Aptium Oncology assets. Aptium Oncology was a subsidiary of AstraZeneca which offered outpatient management and consulting services to cancer patients in the US. Aptium Oncology was affiliated to five hospitals in California, Florida, New Jersey and New York, and had a network of over 100 oncologists.

AstraZeneca identified Aptium Oncology as a non-core business and decided to divest the unit in order to focus on its core businesses. AstraZeneca entered into agreements to sell its interest in the Aptium cancer centers to respective hospitals. By January 2012, the company had entered into agreements with four hospitals. AstraZeneca will provide transitional support to each cancer center during 2012.

AstraZeneca reported Aptium Oncology sales of $224 million, up 2% from the year-ago number for the 12 months ending December 31, 2011. In 2012, the company recorded sales of $43 million until the completion of the Aptium Oncology sale.

The sale of Aptium Oncology assets is not expected to have any effect on the 2012 core earnings guidance range of $5.85 - $6.15 per share. The Zacks Consensus Estimate is pegged at $6.10 per share, within the guidance range. AstraZeneca continues to expect a decline in revenues in a low to mid-teens range compared with 2011 levels (at constant exchange rates).

Neutral on AstraZeneca

We are encouraged by AstraZeneca's focus on high-potential emerging markets and are pleased with its effort to drive the bottom line through cost-cutting initiatives and share buybacks.

However, we remain concerned about the generic competition faced by the company's key products. In 2011, the company lost revenues worth almost $2 billion to generic competition. The weak late-stage pipeline coupled with the slow Brilinta uptake also bothers us. We currently have a Neutral recommendation on AstraZeneca. The stock carries a Zacks #3 Rank (Hold rating) in the short run.

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