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., bribery investigations in various regions and supply
interruptions in the consumer business will affect results. In view
of these challenges, we maintain an Underperform recommendation on
GlaxoSmithKline plc offers pharmaceutical products and other
health-related consumer products through two major divisions:
Pharmaceuticals and Vaccines (prescription drugs and vaccines) and
Consumer Healthcare (over-the-counter (OTC) medicines, oral care
products and nutritional health care products). The company has
operations in more than 100 countries.
Glaxo has also made several strategic investments in emerging
markets in an effort to exploit the higher growth opportunities in
these regions. It is also looking towards acquisitions to grow and
diversify its business.
In Apr 2014, Glaxo entered into a three part agreement with
Novartis under which Glaxo will acquire the latter's vaccines
business (excluding flu vaccines), sell off its oncology business
and create a consumer healthcare joint venture. The transaction is
expected to complete in the first half of 2015.
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 is headquartered in Brentford, UK.
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