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Glaxo (GSK) Q3 Earnings: Will it Deliver a Beat Yet Again?
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We expect GlaxoSmithKline plc (GSK - Free Report) to beat expectations when it reports third-quarter 2017 results on Oct 25, before the market opens. Last quarter, the company delivered a positive earnings surprise of 2.94%.
Glaxo’s shares are up 6.7% this year so far, underperforming the 20.5% increase witnessed by the industry.
Glaxo’s performance has been pretty good so far. The company’s earnings beat expectations thrice in the four trailing quarters while meeting estimates in the remaining quarter. Overall, the company has delivered an average positive earnings surprise of 8.34%.
Let’s see how things are shaping up for this quarter.
Factors to Consider
Glaxo should continue to see strong performance in its Pharmaceuticals and Vaccines business segment.
Glaxo’s Pharmaceuticals segment is expected to be driven by strong sales of new HIV products, Tivicay and Triumeq. Sales of newly launched respiratory drugs, the Ellipta products and Nucala are expected to offset the declines in Seretide, Advair and Avodart. Many of Glaxo’s key drugs like Lovaza and Avodart are facing declining sales due to generic competition. Importantly, pricing dynamics and competitive pressure are hurting sales of its top-selling drug Advair in the United States while generic competition is hurting Advair sales in Europe. A generic version of Advair in the United States is unlikely to be approved this year.
The Vaccines segment will continue benefit from continued uptake of meningitis vaccines, Bexsero and Menveo (acquired from Novartis AG (NVS - Free Report)
Importantly, sales growth is slowing in the Consumer Healthcare segment due to a slowdown in market conditions and the impact of divestures. The Consumer Healthcare segment is expected to remain under pressure in the third and the fourth quarters and is not expected to contribute much to sales growth this year.
Meanwhile, cost savings from restructuring and continued efficiencies should boost operating profits.
In September, Glaxo and partner Innoviva gained FDA approval for their once-daily, single inhaler triple therapy, Trelegy Ellipta, for COPD. The combination of an inhaled corticosteroid (“ICS”), a long-acting muscarinic antagonist (“LAMA”), and a long-acting beta2-adrenergic agonist (“LABA”), Trelegy Ellipta will provide patients with a convenient dosing option and is expected to bring in blockbuster sales. We expect management to comment on commercialization plans for this newly approved product at the Q3 conference call.
Earnings Whispers
Our proven model shows that Glaxo is likely to beat estimates because it has the right combination of two key ingredients. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for a likely positive surprise and Glaxo has the right mix.
Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate (85 cents per share) and the Zacks Consensus Estimate (84 cents per share), is +1.80%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Glaxo has a Zacks Rank #2. The combination of Glaxo’s Zacks Rank #2 and positive ESP makes us confident of an earnings beat in the upcoming release.
Sell-rated stocks (Zacks Rank #4 or 5), on the other hand, should never be considered going into an earnings announcement, especially when the company is seeing negative estimate revisions.
Pfizer, Inc. (PFE - Free Report) with an Earnings ESP of +1.04% and a Zacks Rank #3. The company is scheduled to release results on Oct 31.
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Glaxo (GSK) Q3 Earnings: Will it Deliver a Beat Yet Again?
We expect GlaxoSmithKline plc (GSK - Free Report) to beat expectations when it reports third-quarter 2017 results on Oct 25, before the market opens. Last quarter, the company delivered a positive earnings surprise of 2.94%.
Glaxo’s shares are up 6.7% this year so far, underperforming the 20.5% increase witnessed by the industry.
Glaxo’s performance has been pretty good so far. The company’s earnings beat expectations thrice in the four trailing quarters while meeting estimates in the remaining quarter. Overall, the company has delivered an average positive earnings surprise of 8.34%.
Let’s see how things are shaping up for this quarter.
Factors to Consider
Glaxo should continue to see strong performance in its Pharmaceuticals and Vaccines business segment.
Glaxo’s Pharmaceuticals segment is expected to be driven by strong sales of new HIV products, Tivicay and Triumeq. Sales of newly launched respiratory drugs, the Ellipta products and Nucala are expected to offset the declines in Seretide, Advair and Avodart. Many of Glaxo’s key drugs like Lovaza and Avodart are facing declining sales due to generic competition. Importantly, pricing dynamics and competitive pressure are hurting sales of its top-selling drug Advair in the United States while generic competition is hurting Advair sales in Europe. A generic version of Advair in the United States is unlikely to be approved this year.
The Vaccines segment will continue benefit from continued uptake of meningitis vaccines, Bexsero and Menveo (acquired from Novartis AG (NVS - Free Report)
Importantly, sales growth is slowing in the Consumer Healthcare segment due to a slowdown in market conditions and the impact of divestures. The Consumer Healthcare segment is expected to remain under pressure in the third and the fourth quarters and is not expected to contribute much to sales growth this year.
Meanwhile, cost savings from restructuring and continued efficiencies should boost operating profits.
In September, Glaxo and partner Innoviva gained FDA approval for their once-daily, single inhaler triple therapy, Trelegy Ellipta, for COPD. The combination of an inhaled corticosteroid (“ICS”), a long-acting muscarinic antagonist (“LAMA”), and a long-acting beta2-adrenergic agonist (“LABA”), Trelegy Ellipta will provide patients with a convenient dosing option and is expected to bring in blockbuster sales. We expect management to comment on commercialization plans for this newly approved product at the Q3 conference call.
Earnings Whispers
Our proven model shows that Glaxo is likely to beat estimates because it has the right combination of two key ingredients. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for a likely positive surprise and Glaxo has the right mix.
Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate (85 cents per share) and the Zacks Consensus Estimate (84 cents per share), is +1.80%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Glaxo has a Zacks Rank #2. The combination of Glaxo’s Zacks Rank #2 and positive ESP makes us confident of an earnings beat in the upcoming release.
Sell-rated stocks (Zacks Rank #4 or 5), on the other hand, should never be considered going into an 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
Other Stocks to Consider
Other large-cap pharma stocks that have both a positive ESP and a favorable Zacks Rank include
Bristol-Myers Squibb Company (BMY - Free Report) , scheduled to release results on Oct 26, with an Earnings ESP of +1.05% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Pfizer, Inc. (PFE - Free Report) with an Earnings ESP of +1.04% and a Zacks Rank #3. The company is scheduled to release results on Oct 31.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Click for details >>