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GSK share price: Drugmaker expected to unveil drop in Q2 earnings

Share this article!, Tuesday, July 22: GlaxoSmithKline Plc (LON:GSK) is expected to unveil a decline in profits when it releases its second-quarter results tomorrow.

GSK’s share price, which has shed just under nine percent over the past year, has been little changed in London trading this morning, having lost 0.10 percent to 1,555.50p as of 08:44 BST.
**GSK earnings preview**
The Sunday Times has quoted analysts at GSK’s joint broker UBS as forecasting pre-tax profits of £1.4 billion for the second quarter, down from the £1.7 billion posted for the same period a year ago. The analysts have pointed to the strength of the pound, which is expected to have eroded the FTSE 100 drugmaker’s profits.

In a note circulated to clients last week, UBS said that the market’s average profit expectations for the full year looked “increasingly outdated”. The analysts added that GSK’s quarterly figures could trigger a wave of cuts to forecasts for the drugmaker’s annual results.
UBS has also highlighted issues with GSK’s respiratory drugs which are one of the company’s key growth areas. While the pharma group has made progress with developing new compounds, the analysts have pointed out the ‘slow’ pace of launches of new respiratory drugs.

In April, GSK reported that its core operating profit had declined 18 percent to £1.53 billion. (GSK share price: Drugmaker’s sales drop two percent in Q1) The FTSE 100 drugmaker, however, reiterated its target of increasing earnings per share by between four and eight percent in the current year.

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GSK’s second-quarter results will come as the company faces intensifying scrutiny over its China operations after last week news emerged that the UK drugmaker had found bribery problems at its vaccine business in the country in 2001 which led to the firing of about 30 employees. (GSK share price: Drugmaker admits to finding China bribery problems in 2001)

**Analysts on GSK**
The 24 analysts offering 12-month price targets for GSK for the Financial Times have a median target of 1,690p, with a high estimate of 3,462.18p and a low estimate of 1,460p. As of July 18, the consensus forecast amongst 50 polled investment analysts covering the stock advises investors to hold their position in the FTSE 100 pharma group.
**As of 09:14 BST, buy GSK shares at 1552.00p.**
**As of 09:14 BST, sell GSK shares at 1551.50p.**

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