GSK Gears Up to Report Q3 Earnings: What's in the Cards?
GSK plc. GSK will report third-quarter 2022 results on Nov 2, before market open. In the last reported quarter, the company delivered an earnings surprise of 14.47%.
Shares of GSK have underperformed the industry so far this year. The stock has lost 39.7% compared to the industry’s 21.4% decline.
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GSK’s earnings surpassed estimates in each of the trailing four quarters, delivering a beat of 16.13% on average.
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Factors to Note
At the onset of the quarter, GSK completed the spin-off of its consumer healthcare segment into a new standalone company called Haleon. From second-quarter 2022 onward, GSK’s commercial operations constitute the BioPharma business. Management now reports financial figures under three segments: Specialty Medicines, Vaccines and General Medicines.
In the third quarter, higher sales of newer specialty products are likely to have been offset by the decline in sales of HIV drugs and respiratory medicines due to generic erosion and competitive pressure. It also remains to be seen if the recovery in vaccine sales, particularly Shingrix in recent quarters, continued in the to-be-reported quarter.
Sales of eosinophilic asthma drug Nucala are likely to have been an important contributor to third-quarter 2022 sales. Our model suggests the drug’s sales to be around £663 million. We expect the drug’s international sales to have been a significant contributor to the upside.
This April, the FDA withdrew the emergency use authorization (EUA) granted to the COVID-19 drug, Xevudy (sotrovimab), which was developed in collaboration with Vir Biotechnology VIR. The withdrawal decision for the Vir Biotechnology-partnered antibody therapy was based on data that showed that it was unlikely for sotrovimab dose to be effective against the Omicron variant. It remains to be seen how much Xevudy sales were recorded by GSK and Vir Biotechnology in the third quarter. Our model suggests Vir Biotechnology-partnered Xevudy to generate a modest sales figure of around £20 million during the quarter.
The trend in Respiratory category sales is expected to have declined in the third quarter as sales of most of the drugs in this category are expected to fall likely due to continued competitive and pricing pressure. Our model suggests the Respiratory category sales to be around £1.35 billion for the quarter.
GSK’s key vaccine, Shingrix’s sales showed a strong demand recovery in the United States, which coupled with new launches in different countries, benefited first-half 2022 sales. We expect this rising trend to have declined in the third quarter. Our model predicts shingles vaccine sales to stand at around £379 million, a decline of around 25% compared to the previous quarter.
Sales of Meningitis and Influenza vaccines are likely to have started a strong recovery in second-half 2022 on the back of CDC purchases in the United States. Our model suggests meningitis vaccine sales to be around £326 million, while influenza vaccine sales are expected to stand at $361 million.
Oncology sales, comprising Zejula and Jemperli, are also likely to have witnessed growth. The uptake trend of the new multiple myeloma treatment drug Blenrep remains to be seen. Our model suggests that the Oncology portfolio is likely to have attained a modest year-over-year growth of around 0.8% in sales.
The competitive environment and the shift in portfolio toward two-drug regimens may have hurt sales of three-drug regimens — Tivicay and Triumeq — and older HIV drugs. However, the strong growth trend witnessed in recent quarters in sales of the two-drug regimens, Juluca and Dovato, might have helped the company partially offset some of the losses in sales of the three-drug regimens during the to-be reported quarter. Our model estimates sales from the HIV portfolio to stand at £1.02 billion for the quarter, a decline of approximately 19% as compared to the year-ago quarter.
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for GSK this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here, as you will see below. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is 0.00%. Both the Most Accurate Estimate and Zacks Consensus Estimate stand at 91 cents per ADR
Zacks Rank: GSK currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Stocks to Consider
Here are some biotech stocks that have the right combination of elements to beat on earnings this time around:
Angion Biomedica ANGN has an Earnings ESP of +25.00% and a Zacks Rank #1.
Angion Biomedica’s stock has plunged 65.5% this year so far. Angion Biomedica beat earnings estimates in three of the last four quarters while missing the mark on one occasion. Angion Biomedica has delivered an earnings surprise of 62.85%, on average.
Hookipa Pharma HOOK has an Earnings ESP of +8.33% and a Zacks Rank #1.
Hookipa Pharma’s stock has plunged 45.5% this year so far. Hookipa Pharma missed earnings estimates in three of the last four quarters while beating the mark on one occasion. Hookipa Pharma has delivered a negative earnings surprise of 58.21%, on average.
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