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., 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 the stock.


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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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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