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GlaxoSmithKline (GSK) Q4 Earnings: What's in the Cards?

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GlaxoSmithKline plc (GSK - Free Report) is scheduled to report fourth-quarter 2016 and full-year results on Feb 8. Last quarter, the company delivered a positive earnings surprise of 7.79%.

Glaxo’s share price was up 2.4% this year so far, outperforming the 0.6% decline witnessed by the Zacks classified Large-Cap Pharma industry.

Glaxo’s performance has been pretty good so far, with the company’s earnings beating expectations thrice in the four trailing quarters. Overall, the company has delivered an average positive surprise of 8.96%.

Let’s see how things are shaping up for this quarter.

Factors to Consider

Glaxo’s Pharmaceuticals segment is expected to continue being driven by strong sales of new HIV products, Tivicay and Triumeq. Sales of newly launched respiratory drugs Relvar/Breo, Incruse, Anoro, Arnuity and Nucala are expected to offset the decline in Seretide, Advair and Avodart. Avodart is facing falling sales due to intense generic competition.

The Vaccines segment will benefit from continued uptake of meningitis vaccines, Bexsero and Menveo (acquired from Novartis AG (NVS - Free Report) .

Over the past two quarters, Consumer Healthcare delivered a strong performance across the Oral Health and Wellness Power brands in all regions, particularly the international markets. The trend is expected to continue in the to-be-reported quarter as well.

We expect investors to focus on the company’s performance, sales ramp-up of newly launched drugs and pipeline updates on the fourth-quarter conference call.

Cost savings from restructuring initiatives and continued efficiencies should boost operating profits.

Earnings Whispers

Our proven model does not conclusively show that Glaxo is likely to beat on earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. However, that is not the case here, as you will see below.

Zacks ESP: The Most Accurate estimate stands at 53 cents, while the Zacks Consensus Estimate is pegged higher at 56 cents. So, the Earnings ESP is -5.36%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Glaxo’s Zacks Rank #3 increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings beat.

We caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

GlaxoSmithKline PLC Price and EPS Surprise

 

GlaxoSmithKline PLC Price and EPS Surprise | GlaxoSmithKline PLC Quote

Stocks to Consider

A couple of stocks in the healthcare sector that have both a positive Earnings ESP and a favorable Zacks Rank are:

Acorda Therapeutics, Inc. is expected to release results on Feb 14. The company has an Earnings ESP of 5.66% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Kite Pharma, Inc. has an Earnings ESP of +13.64% and a Zacks Rank #3. The company is expected to release results next month.

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