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Glaxo (GSK) Beats 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). Additionally, the companies created a joint venture (“JV”), thereby combining their consumer divisions to form a larger consumer health care business.

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 adding cancer drugs to boost its pharma pipeline.

Meanwhile, like many of its peers, Glaxo is facing challenges in the form of stiff competition, genericization, pricing pressure and slowing growth in emerging markets. 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 mixed so far, with the company’s earnings beating expectations thrice in the trailing four quarters while missed once. Overall, the company has delivered an average positive surprise of 9.38%.

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 78 cents per American depositary share in the second quarter of 2019, which beat our consensus estimate of 64 cents. The company’s focus on cost control initiative has boosted margins.

Revenues Beat: Revenues were up 5% year over year at constant exchange rate (“CER”) to $9.98 billion (£7.8 billion).  Revenues beat the Zacks Consensus Estimate of $9.55 billion.

Key Stats: Sales in Vaccines segment surged 23% at CER while Consumer Healthcare sales increased 4%. However, Pharmaceuticals sales were down 1% at CER.  The Respiratory segment increased 12% at CER. HIV product sales fell 2% at CER.

2019 Guidance: Glaxo provided an improved earnings guidance for 2019. EPS is expected to decline by 3-5% at CER (previously 5-9%) in 2019. The new guidance reflects improvement in operating performance, lower interest expense and one-time benefit in profit sharing with associates.

Share Price Impact: Shares rose almost 1.2% in pre-market trading.

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

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