GlaxoSmithKline, plc (GSK): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report


Glaxo's third quarter 2014 earnings were up 5% (CER) to $0.93 per ADS, above the Zacks Consensus Estimate of $0.79. Revenues declined 3% y/y (CER) to $9.4 billion. The company continues to expect 2014 core earnings to be broadly in line (CER) with the year-ago period on an ex-divestment basis. We are concerned about the challenges faced by the company in the form of increasing competition, genericization and pricing pressure. Other factors like weak sales in the U.S., the bribery investigations in various regions and supply interruptions in the consumer business will affect results. In view of these challenges, we believe that Glaxo is overvalued and maintain an Underperform recommendation on the stock.


GlaxoSmithKline plc offers pharmaceutical products and other health-related consumer products. These products are offered worldwide through two major divisions: Pharmaceuticals and Vaccines and Consumer Healthcare. In particular, the Pharmaceuticals and Vaccines segment delivers prescription drugs and vaccines. The Consumer Healthcare segment delivers over-the-counter (OTC) medicines, oral care products and nutritional health care products. The company has operations in more than 100 countries.

Glaxo has its large R&D centers in the UK, U.S., Spain, Belgium and China and is focusing on countries with high-growth potential, which includes Asia-Pacific, Latin America and Japan. Glaxo has also made several strategic investments in emerging markets in an effort to exploit higher growth opportunities in those regions. It is also looking towards acquisitions to grow and diversify its business. The company has made quite a few acquisitions over the last few quarters including those of Human Genome, Cellzome and Okairos. The company plans to pursue bolt-on acquisitions in the near future.

Pharmaceuticals and Vaccines and Consumer Healthcare contributed 80.4% and 19.6%, respectively, to total revenues in 2013. Total sales for 2013 were 26.5 billion (approximately $41.6 billion).

The company has its headquarters in Brentford, UK.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Stocks

Referenced Stocks: GSK

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