Today we are looking at the posture of institutional investors towards two companies with AGMs scheduled for next week – Centrica and AstraZeneca. Detailed reports, updating in real time, are available via the links below with insights created by powerful artificial intelligence from Irithmics. They are based on the activity of thousands of institutional investors globally.
The reporting provides an interesting insight into how investors are feeling about a stock going into the AGM, how they are positioning portfolios, both in terms of short term, speculative trading behaviour and also tactical and strategic allocations. These reports will continue to update 10 days after the AGM after which they will close. They will help to measure and monitor the changing investor behaviour in the wake of AGM events.
Utility Centrica hosts its AGM on Monday. Last year it reported an operating loss of GBP 362m which was largely driven by the pandemic and the fact that many commercial clients were forced to close down their premises. The Centrica share price has been recovering more latterly.
Investors seem to like the fact that Centrica has entered into a restructuring process, selling its North American operations to Direct Energy and beefing up its balance sheet to the tune of GBP 3.6bn in cash. Debts have also been reduced further, which is always going to sit well with strategic investors.
One big issue we have touched on before in previous analysis of Centrica, and which will no doubt be on the table at the AGM, is the falling number of British Gas customers. The net decline in customers seemed to have slowed into 2H 2020, but with energy prices going up and more competitors in the market, this will be one for investors to watch.
Centrica could be in a positive position as the UK energy regulator Ofcom starts to lift the caps on energy prices, which means the potential for bigger profits from energy utilities. What will be interesting is the difference between tactical / short term speculative investment sentiment, and the longer term view of the buy and hold investors.
The data report from Irithmics on Centrica shows the behaviour of institutional investors – e.g. market activities, portfolio management) and this implies a difference in their expectations and Centrica’s current share price. The current Centrica share price is above current strategic expectations and in line with current tactical and speculative allocations. The question now is whether the Centrica AGM re-sets those big investors’ expectations.
AstraZeneca is arguably one of the most discussed companies in the world right now and its AGM will be closely watched. The company delivered a strong set of results for Q1 with significant revenue growth. Even without the contribution from the COVID vaccine development, revenue growth was up 15% in Q1. Product sales have also looked good, driven by sales of drugs in areas like oncology and bio-pharmaceuticals.
It’s not just about the COVID vaccine in other words. AstraZeneca told investors that globally new medicines represented 53% of total revenue. There have been significant increases in its emerging markets business – 14% growth to $2,592m.
Worldwide vaccinations are likely to increase over the next few months. If we see the impact of the pandemic reducing 2H – hard to anticipate given the progress of the virus in India – AZN will be well positioned for an acceleration of its performance in 2H 2021.
“Having delivered one of the most important vaccines in human history, it is no surprise that the company has delivered such a solid set of results,” said Neil Shah, Director of Research at Edison Group. “With non-COVID medication making up such a significant portion of this growth, the company is well-positioned for a high growth year as 2021 continues.”
According to the Irithmics data on 7 May (and bear in mind the report will dynamically adjust to reflect changes) the Astra Zeneca AGM coincides with an anticipated reallocation of institutional capital away from AZN, although the forecast is that institutions will return later. If we see AZN stock rising after the AGM, it would be reasonable to assume the intention of investors to allocate / re-allocate was not affected by events at the AGM itself.
Irithmics is providing more detailed analysis for corporate clients, their investor relations, advisors and asset managers. For more information, corporates and IR teams are encouraged to contact www.irithmics.com. Note that charts are dynamic and will be continuously updated until 10 days after the AGM.