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Is a Beat in the Cards for Glaxo (GSK) This Earnings Season?
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We expect GlaxoSmithKline plc (GSK - Free Report) to beat expectations when it reports fourth-quarter 2017 results on Feb 7, before the market opens. Last quarter, the company delivered a positive surprise of 1.19%.
Glaxo’s shares have underperformed the industry in a year’s time. The stock has lost 4.3% against the industry’s rally of 21.1%.
Glaxo’s earnings performance has been pretty good so far. The company’s earnings surpassed estimates thrice in the trailing four quarters, meeting estimates in the remaining quarter. Overall, the company came up with an average beat of 6.69%.
Let’s see, how things are shaping up for this quarter.
Factors to Consider
Glaxo should continue to see strong sales of in its Pharmaceuticals and Vaccines business segment.
Glaxo’s Pharmaceuticals segment is expected to be driven by solid sales of new HIV products, Tivicay and Triumeq. Sales of newly launched respiratory drugs, the Ellipta products and Nucala are likely to offset the declines in sales of older respiratory products Seretide, Advair and Avodart. On the third-quarter conference call, Glaxo had said that its inhaled respiratory products, particularly the older ones, are facing competitive and continued pricing pressure, which is expected to continue.
Meanwhile, many of Glaxo’s key drugs like Lovaza and Avodart are facing a sales decline due to generic competition - a trend we expect will continue in Q4. Importantly, pricing dynamics and rivalry pressure are hurting sales of the company’s top-selling drug, Advair in the United States while generic competition is hampering Advair sales in Europe.
The Vaccines segment will consistently benefit from a sustained uptake of meningitis vaccines like Bexsero and Menveo {acquired from Novartis AG (NVS - Free Report) }.
While Shingrix vaccine (prevention of shingles) was approved in the United States in October 2017, Trelegy Ellipta (only once-daily single inhaler triple therapy for COPD) was granted an EU approval in November 2017. Trelegy Ellipta is already approved in the United States for COPD. Meanwhile, Juluca (dolutegravir + rilpivirine) — the first dual treatment for HIV — received approval in the United States last November. We expect management to comment on the commercialization plans for these newly approved products on the Q4 conference call.
Importantly, sales growth is on the wane in the Consumer Healthcare segment due to a slowdown in market conditions and the impact of divestitures. The Consumer Healthcare segment is anticipated to remain under stress in the fourth quarter and is not much predicted to push up the sales.
Meanwhile, cost savings from restructuring and continued efficiencies should boost operating profits.
Earnings Whispers
Our proven model shows that Glaxo is likely to beat estimates because it has the right combination of the two key ingredients. A stock needs to have both a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for an earnings beat and Glaxo precisely has the correct mix.
Zacks ESP: Glaxo has an Earnings ESP of +10.35%, representing the difference between the Most Accurate estimate (72 cents per share) and the Zacks Consensus Estimate (65 cents). A positive ESP indicates a likely positive surprise. 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 #3. The combination of Glaxo’s Zacks Rank #3 and a positive ESP makes us confident of an earnings beat in the upcoming release.
Conversely, the Sell-rated stocks (#4 or 5) should never be considered going into an earnings announcement, especially when the company is seeing negative estimate revisions.
Alexion Pharmaceuticals, Inc. is scheduled to report earnings on Feb 8. The company has an Earnings ESP of +3.45% and a Zacks Rank of 3.
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Image: Bigstock
Is a Beat in the Cards for Glaxo (GSK) This Earnings Season?
We expect GlaxoSmithKline plc (GSK - Free Report) to beat expectations when it reports fourth-quarter 2017 results on Feb 7, before the market opens. Last quarter, the company delivered a positive surprise of 1.19%.
Glaxo’s shares have underperformed the industry in a year’s time. The stock has lost 4.3% against the industry’s rally of 21.1%.
Glaxo’s earnings performance has been pretty good so far. The company’s earnings surpassed estimates thrice in the trailing four quarters, meeting estimates in the remaining quarter. Overall, the company came up with an average beat of 6.69%.
Let’s see, how things are shaping up for this quarter.
Factors to Consider
Glaxo should continue to see strong sales of in its Pharmaceuticals and Vaccines business segment.
Glaxo’s Pharmaceuticals segment is expected to be driven by solid sales of new HIV products, Tivicay and Triumeq. Sales of newly launched respiratory drugs, the Ellipta products and Nucala are likely to offset the declines in sales of older respiratory products Seretide, Advair and Avodart. On the third-quarter conference call, Glaxo had said that its inhaled respiratory products, particularly the older ones, are facing competitive and continued pricing pressure, which is expected to continue.
Meanwhile, many of Glaxo’s key drugs like Lovaza and Avodart are facing a sales decline due to generic competition - a trend we expect will continue in Q4. Importantly, pricing dynamics and rivalry pressure are hurting sales of the company’s top-selling drug, Advair in the United States while generic competition is hampering Advair sales in Europe.
The Vaccines segment will consistently benefit from a sustained uptake of meningitis vaccines like Bexsero and Menveo {acquired from Novartis AG (NVS - Free Report) }.
While Shingrix vaccine (prevention of shingles) was approved in the United States in October 2017, Trelegy Ellipta (only once-daily single inhaler triple therapy for COPD) was granted an EU approval in November 2017. Trelegy Ellipta is already approved in the United States for COPD. Meanwhile, Juluca (dolutegravir + rilpivirine) — the first dual treatment for HIV — received approval in the United States last November. We expect management to comment on the commercialization plans for these newly approved products on the Q4 conference call.
Importantly, sales growth is on the wane in the Consumer Healthcare segment due to a slowdown in market conditions and the impact of divestitures. The Consumer Healthcare segment is anticipated to remain under stress in the fourth quarter and is not much predicted to push up the sales.
Meanwhile, cost savings from restructuring and continued efficiencies should boost operating profits.
Earnings Whispers
Our proven model shows that Glaxo is likely to beat estimates because it has the right combination of the two key ingredients. A stock needs to have both a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for an earnings beat and Glaxo precisely has the correct mix.
Zacks ESP: Glaxo has an Earnings ESP of +10.35%, representing the difference between the Most Accurate estimate (72 cents per share) and the Zacks Consensus Estimate (65 cents). A positive ESP indicates a likely positive surprise. 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 #3. The combination of Glaxo’s Zacks Rank #3 and a positive ESP makes us confident of an earnings beat in the upcoming release.
Conversely, the Sell-rated stocks (#4 or 5) 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
Here are some other health care stocks worth considering with the right combination of elements to beat on earnings this time around:
Exelixis, Inc. (EXEL - Free Report) is expected to release results on Feb 26. The company has an Earnings ESP of +7.23% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Alexion Pharmaceuticals, Inc. is scheduled to report earnings on Feb 8. The company has an Earnings ESP of +3.45% and a Zacks Rank of 3.
Breaking News: Cryptocurrencies Now Bigger than Visa
The total market cap of all cryptos recently surpassed $700 billion – more than a 3,800% increase in the previous 12 months. They’re now bigger than Morgan Stanley, Goldman Sachs and even Visa! The new asset class may expand even more rapidly in 2018 as new investors continue pouring in and Wall Street becomes increasingly involved.
Zacks has just named 4 companies that enable investors to take advantage of the explosive growth of cryptocurrencies via the stock market.
Click here to access these stocks >>