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Glaxo (GSK) Beats Earnings & Revenue Estimates in Q3

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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. 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 12.74%.

Currently, Glaxo has a Zacks Rank #2 (Buy), 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 95 cents per American depositary share in the third quarter of 2019, which beat our consensus estimate of 83 cents. The company’s focus on cost control initiative has boosted margins.

Revenues Beat: Revenues were up 11% year over year at constant exchange rate (“CER”) to $11.56 billion (£9.4 billion).  Revenues beat the Zacks Consensus Estimate of $11.34 billion.

Key Stats: Sales in Vaccines segment surged 15% at CER while Consumer Healthcare sales increased 25%. Pharmaceuticals sales were up 3% at CER.  The Respiratory segment increased 19% at CER. HIV product sales remained flat at CER.

2019 Guidance: Glaxo provided an improved earnings guidance for 2019. Adjusted EPS is expected to remain flat at CER (previously decline by 3-5%) in 2019. The new guidance reflects improvement in operating performance, increased investment in R&D and priority assets and expected lower effective tax rate.

Share Price Impact: Shares rose almost 2.4% in pre-market trading.

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

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