Earnings Preview: GlaxoSmithKline Q3 earns seen up

Earnings Preview: GlaxoSmithKline to report higher 3Q earns on vaccines, currency gains

• On 12:39 pm EDT, Monday October 26, 2009

LONDON (AP) -- GlaxoSmithKline PLC is expected to report higher third-quarter earnings before London's financial markets open Wednesday. The following is a summary of key developments and analyst opinion for the period.

OVERVIEW: Glaxo is expected to report significantly higher earnings for the third quarter compared to a year ago thanks to a boost in demand for its swine flu vaccines and the weakness of the British pound against the U.S. dollar.

BY THE NUMBERS: Glaxo is likely to report net profit of around 1.47 billion pounds ($2.4 billion), according to consensus figures from Thomson Reuters. Revenue is expected to increase around 15 percent to 6.7 billion pounds.

ANALYST TAKE: Hargreaves Lansdown stockbrokers in London says that Glaxo's Consumer Healthcare products business could also see further emerging market growth.

WHAT'S AHEAD: Glaxo is expected to reap even bigger profits from its swine flu vaccines in the fourth quarter, particularly as Britain and the United States appear to be heading for a new wave of cases. Analysts forecast sales of Pandemrix to hit 1 billion pounds and anti-viral treatment Relenza to exceed 170 pounds in the third and fourth quarters. Evolution Securities is forecasting full year earnings per share of around 128 pence, compared with 120 pence, noting that pandemic flu sales are virtually fixed-cost free, implying that most of the gross margin "should fall straight down to the bottom line."

Hargreaves Lansdown says that cost cutting remains a major focus for the pharma industry, adding that speculation continues about Glaxo and British rival AstraZeneca PLC's place in consolidation after Pfizer acquired Wyeth and Merck acquired Schering-Plough.

Panmure highlights the promising experimental lupus drug, Benlysta, which Glaxo is co-marketing with Biotech drugmaker Human Genome Sciences. Panmure says more positive results released last week from trials of the drug removed a significant downgrade risk to its forecast.

STOCK PERFORMANCE: Glaxo shares closed Friday at 1,236 pence, up 16 percent from 1,068 on June 30.

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