Medical mammoth AstraZeneca (LSE: AZN) hasn't yet managed to get over the enduring hump of patent expirations, despite the bright work being achieved by its development teams.
Exclusivity losses on revenue-driving labels like its Crestor cholesterol battler has seen the Cambridge business fail to punch any sort of earnings increase since 2011. And City analysts suggest that AstraZeneca's troubles aren't done yet, with declines of 6% and 3% expected for 2016 and 2017 respectively.
Investing in the pharmaceuticals sector is rarely plain sailing, the impact of product delays and even terminations resulting in potentially-explosive capex bills or bigger financial holes in the form of lost revenues. This -- allied with AstraZeneca's aforementioned patent problems -- may make it a risk too far for cautious stock selectors.
But I believe braver investors can look forward to abundant returns in the years ahead as the firm's product pipeline churns out the next generation of sales stars. And AstraZeneca is dedicating investment to white-hot growth areas like diabetes, an area where sales exploded 18% during January-June as demand for its relatively-new Farxiga product soared.
And AstraZeneca is also pulling up trees in emerging markets, a particularly exciting story as healthcare spend in these 'new' regions gathers pace. Revenues from such territories rose 7% in the first half, helped by rocketing demand for respiratory treatment Symbicort -- sales of the product soared 33% in China alone during the period.
A forward P/E rating of 15.5 times nudges above the FTSE 100 average of 15 times, but I reckon AstraZeneca's solid pipeline, allied with a chunky 4.2% dividend yield, makes it a bargain at the current time.
Phone in a fortune
The crushing cost of its fibre-laying programme is expected to produce a rare earnings blip at BT Group(LSE: BT-A) in the current fiscal period
Indeed, an 11% drop is expected by the Square Mile in the year to March 2017. But I reckon a subsequent prospective earnings multiple of 12.7 times represents terrific value given the rising might of BT's multi-services proposition.
The company's decision to throw its broadband customers free access to BT Sport proved a game-changer in breaking Sky's dominance of the market.
Although BT no longer offers this deal, the huge sums ploughed into top-tier sporting events like UEFA Champions League and FA Premier League football, UFC cage fighting and Aviva Premiership rugby has made its sports channels a hit with couch potatoes all over the land.
Additionally, the London company's aim to spread its internet network over the country is also paying off handsomely, giving it a 79% share of all net broadband additions during April-June. This helped push revenues at BT's Consumer division 9% higher in the quarter, to £1.18bn.
Furthermore, BT's ability to generate vast quantities of cash is expected to keep powering the dividend -- a reward of 14p per share in fiscal 2016 is anticipated to rise to 15.5p in the current period, yielding a splendid 4.1%.
With the company's acquisition of mobile giant EE providing BT's sales outlook with a further shot in the arm, I reckon the company should prove a lucrative pick for patient investors.
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Royston Wild has no position in any shares mentioned. The Motley Fool UK has recommended AstraZeneca and Sky. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.