Glaxo (GSK) Beats Q2 Earnings, Misses Sales

GlaxoSmithKline plc (NYSE:GSK) , one of the largest health care companies, reshaped its business following the Mar 2015 completion of the three-part, inter-conditional transaction with Novartis related to its Consumer Healthcare, Vaccines and Oncology businesses. Under the deal, Glaxo sold its oncology assets to Novartis and acquired Novartis’ Vaccines business (excluding influenza vaccines). Additionally, the companies created a joint venture (JV), thereby combining their consumer divisions to form a larger consumer health care business.

Following the completion of the deal, the UK-based company now focuses on its three core businesses – Pharmaceuticals (respiratory, HIV), Vaccines (pediatric, adolescent, adult, and travel vaccines) and Consumer Healthcare (wellness, oral health, nutrition and skin health products).

However, like many of its peers, Glaxo is facing challenges in the form of increasing competition, genericization and pricing pressure in major markets.

In this scenario, investor focus remains on late-stage pipeline candidates and their commercial potential, restructuring and cost-cutting initiatives and performance of new products apart from the usual top-and bottom-line numbers.

Glaxo’s performance has been pretty good so far, with the company’s earnings beating expectations thrice in the trailing four quarters while posted in-line results in another. Overall, the company has delivered an average positive surprise of 12.28%.

Currently, Glaxo has a Zacks Rank #3 (Hold), but that could definitely change following the company’s earnings report which was just released. We have highlighted some of the key stats from this just-revealed announcement below:

Earnings Beat: Glaxo reported core earnings of 70 cents per American depositary share, which beat our consensus estimate of 68 cents.

Revenues Miss: Revenues were up 3% year over year at constant exchange rate (CER) to $9.42 billion (£7.3 billion). However, revenue marginally missed Zacks Consensus Estimate of $9.52 billion.

Key Stats: Sales in the quarter were driven by strong performance mainly in the Vaccines and Pharmaceuticals segments which were up 5% and 3% respectively at CER. The Consumer Healthcare segments were flat at CER.

2017 Guidance: Glaxo lowered its core 2017 earnings growth from 5-7% to 3-5% at CER, with no Advair generics are launched this year.

Share Price Impact: Shares are down almost 1% in pre-market trading.

Check back later for our full write up on GSK earnings report later!

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