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Glaxo (GSK) Miss Earnings Estimates in Q4, Revenues Beat

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Indrajit Bandyopadhyay
·3 min read
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GlaxoSmithKline plc GSK, 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 COVID-19 restrictions, 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 in two of the trailing four quarters, while missing the same twice. Overall, the company has delivered an average positive surprise of 8.2%.

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 Miss: Glaxo reported core earnings of 62 cents per American depositary share in the fourth quarter of 2020, which missed our consensus estimate of 70 cents. Core earnings were down 5% year over year at constant exchange rate (“CER”).

Revenues Beat: Revenues were down 3% year over year at CER to $11.62 billion (£8.74 billion).  Revenues beat the Zacks Consensus Estimate of $11.25 billion.

Key Stats: Sales in Vaccines segment increased 16% at CER while Consumer Healthcare sales decreased 7%. Pharmaceuticals sales were also down 3% at CER. The Respiratory segment increased 15% at CER. HIV product sales were up 2% at CER. Shingrix sales increased 23% at CER.

2021 Guidance: Glaxo expects adjusted EPS to decline by a mid to high-single digit percentage at CER, year over year, in 2021.

Share Price Impact: Shares were down 4.6% in pre-market trading.

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

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