Stocks & Shares Pharmaceuticals & Health

GSK share price volatile as group posts rise in Q1 sales

Shares in GlaxoSmithKline (LON:GSK) have retreated in London this afternoon following an initial jump as the blue-chip drugmaker posted a rise in sales and earnings, having benefitted from strong demand for its vaccines and HIV treatments. The company, however, continues to expect a decline in full-year earnings as a generic version of its respiratory drug Advair hit the US market.

As of 15:34 BST, GSK’s share price had given up 0.88 percent to 1,559.60p, having traded about one percent higher immediately after the results were released. The pharmco’s shares are pressuring the Footsie, partly offsetting gains in Lloyds (LON:LLOY) and Sainsbury’s (LON:SBRY), whose shares have been in demand on the back of corporate updates.

GSK posts rise in sales

GSK announced in a statement today that its sales had grown six percent to £7.7 billion in the first quarter. The company delivered a four-percent rise in pharmaceutical sales, supported by a 23-percent rise in Vaccines. The group’s earnings per share meanwhile soared 50 percent to 16.8p.

The company declared 19p per share dividend for the quarter and noted that it continued to expect 80p for full year.

“We have made a strong start to 2019, which is an important year of execution for GSK,” the blue-chip pharmco’s chief executive Emma Walmsley commented in the statement, adding that strengthening the company’s pipeline remained GSK’s number one priority.

Going forward, the London-listed drugmaker continues to expect its adjusted earnings per share to decline between five percent and nine percent at constant exchange rates this year, reflecting the recent approval of a substitutable generic competitor to Advair in the US, as well as the expected impact of the Tesaro acquisition. The guidance further assumes that the proposed Consumer Healthcare nutrition disposal closes by the end of 2019 and the proposed Consumer Healthcare Joint Venture with Pfizer closes in the second half of the year.

Analysts on pharmco

Credit Suisse reaffirmed the blue-chip group as a ‘neutral’ last week, without specifying a target on the GSK share price. According to MarketBeat, the blue-chip group currently has a consensus ‘hold’ rating and an average price target of 1,518.15p.

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