GSK Gears Up to Report Q4 Earnings: What's in the Cards?
GSK plc. GSK will report fourth-quarter 2022 results on Feb 1, before the opening bell. In the last reported quarter, the company delivered an earnings surprise of 21.11%.
Shares of GSK have underperformed the industry in the past year. The stock has lost 37.0% compared with the industry’s 8.8% decline.
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GSK’s earnings surpassed estimates in each of the trailing four quarters, delivering a beat of 14.85% on average.
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Factors to Note
Last July, GSK completed the spin-off of its consumer healthcare segment into a new standalone company called Haleon. Following the demerger, GSK’s commercial operations now constitute only the BioPharma business. Management reports financial figures under three segments — Specialty Medicines, Vaccines and General Medicines.
In the fourth quarter, higher sales of newer specialty products like Dovato, Nucala, Trelegy Ellipta, Shingrix and Juluca are likely to have been offset by the decline in sales of older HIV drugs and respiratory medicines due to generic erosion and competitive pressure. Our model suggests the Respiratory sales to be around £1.49 billion for the quarter.
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 offset 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 £1.65 billion for the quarter, suggesting a 31% rise from the year-ago quarter’s levels.
Sales of eosinophilic asthma drug Nucala are likely to have been an important contributor to fourth-quarter 2022 sales. Our model suggests the drugs sales to be around £391 million. We expect the drug’s international sales to have been a significant contributor to the upside.
Last 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 fourth quarter. Per our model, Vir Biotechnology-partnered Xevudy will likely generate a modest sales figure of around £10 million during 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 2022 sales. We expect this rising trend to have continued in the fourth quarter. Our model predicts shingles vaccine sales to stand at around £692 million.
Sales of Meningitis and Influenza vaccines have shown a strong recovery in third-quarter 2022 on the back of CDC purchases in the United States. This trend is likely to have continued in the fourth quarter. Our model suggests meningitis vaccine sales to be around £297 million, while influenza vaccine sales are expected to stand at around £255 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 generated around £194 million in sales.
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: GSK has an Earnings ESP of -6.46% as the Most Accurate Estimate of 56 cents per ADR is lower than the Zacks Consensus Estimate of 59 cents.
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:
Arcus Biosciences RCUS has an Earnings ESP of +29.01% and a Zacks Rank #1.
Arcus Biosciences’ stock has declined 24.9% in the past year. Arcus Biosciences beat earnings estimates in three of the last four quarters while missing the mark on one occasion. Arcus Biosciences has delivered an earnings surprise of 56.74%, on average.
Syndax Pharmaceuticals SNDX has an Earnings ESP of +17.83% and a Zacks Rank #1.
Syndax Pharmaceuticals’ stock has surged 72.2% in the past year. Syndax Pharmaceuticals missed earnings estimates in three of the last four quarters while meeting the mark on one occasion. Syndax Pharmaceuticals has delivered an earnings surprise of 95.39%, on average.
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