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Glaxo (GSK) Misses Earnings & Revenue Estimates in Q2

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GlaxoSmithKline plc (GSK - Free Report) , one of the largest health care companies, reshaped its business following the March 2015 completion of the three-part, inter-conditional transaction with Novartis related to its Consumer Healthcare, Vaccines and Oncology businesses. Under the deal, Glaxo sold its oncology assets to Novartis and acquired Novartis’ Vaccines business (excluding influenza vaccines). Glaxo has created a joint venture (“JV”) with Pfizer earlier in 2019, thereby combining their consumer healthcare unit.

Following the completion of the deal, the UK-based company now focuses on its three core businesses – Pharmaceuticals (respiratory, HIV), Vaccines (pediatric, adolescent, adult, and travel vaccines) and Consumer Healthcare (wellness, oral health, nutrition and skin health products). However, Glaxo is currently focusing on its core assets and divesting non-core assets.

Meanwhile, like many of its peers, Glaxo is facing challenges in the form of stiff competition, genericization and pricing pressure as well as COVID-19 pandemic. In this scenario, investor focus remains on late-stage pipeline candidates and their commercial potential, restructuring and cost-cutting initiatives and performance of new products apart from the usual top-and bottom-line numbers.

Glaxo’s performance has been decent so far, with the company’s earnings beating expectations in three of the trailing four quarters, while missing the same once. Overall, the company has delivered an average positive surprise of 13.31%.

Currently, Glaxo has a Zacks Rank #3 (Hold), but that could definitely change following the company’s earnings report which was just released. We have highlighted some of the key stats from this just-revealed announcement below:

Earnings Beat: Glaxo reported core earnings of 42 cents per American depositary share in the second quarter of 2020, which missed our consensus estimate of 49 cents. Core earnings declined 38% year over year at constant exchange rate (“CER”).

Revenues Beat: Revenues were up 19% year over year at CER to $8.37 billion (£7.6 billion).  Revenues also missed the Zacks Consensus Estimate of $9.6 billion.

Key Stats: Sales across all segments were significantly disrupted by the COVID-19 pandemic as well as destocking, following stockpiling in the first quarter. Sales in Vaccines segment declined 29% at CER while Consumer Healthcare sales increased 25%. Pharmaceuticals sales were down5 6% at CER. The Respiratory segment increased 16% at CER. HIV product sales were down 3% at CER.

2020 Guidance: Based on its current assessment of COVID-19 impact, Glaxo maintained its previous guidance for adjusted EPS to decline 1% to 4% at CER, year over year, in 2020.

Share Price Impact: Shares were down 1.5% in pre-market trading.

Check back later for our full write up on GSK earnings report later!

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