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Glaxo (GSK) Beats Earnings & Revenue Estimates in Q1

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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 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 12.54%.

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 93 cents per American depositary share in the first quarter of 2020, which beat our consensus estimate of 79 cents. Core earnings surged 26% year over year at constant exchange rate (“CER”).

Revenues Beat: Revenues were up 19% year over year at CER to $11.26 billion (£9.1 billion).  Revenues also beat the Zacks Consensus Estimate of $10.95 billion.

Key Stats: Sales in Vaccines segment surged 19% at CER while Consumer Healthcare sales increased 46%. Growth in Consumer Healthcare segment was heavily driven by consumer and government responses to the COVID-19 pandemic. Pharmaceuticals sales were also up 6% at CER. The Respiratory segment increased 38% at CER. HIV product sales were up 8% 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. However, it will be updated later, if needed.

Share Price Impact: Shares were up 0.2% in pre-market trading.

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

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