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Will Glaxo (GSK) Q4 Earnings Recover From Coronavirus Woes?
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GlaxoSmithKline plc (GSK - Free Report) will report fourth-quarter 2020 results on Feb 3, before market open. In the last reported quarter, the company delivered earnings surprise of 17.95%.
Shares of Glaxo have underperformed the industry in the past year. The stock has declined 19% against the industry’s increase of 6.3%.
Glaxo’s earnings surpassed estimates in two of the trailing four quarters and missed the same twice, delivering beat of 8.2%, on average.
Factors to Consider
During the fourth quarter, growth in Glaxo’s revenues is likely to have been driven by new and specialty products, partially offset by weaker vaccine sales and decline in sales of Established Pharmaceuticals segment. Meanwhile, the impact of Advair generics and rising competition in the HIV segment, especially for three-drug regimens, might have hurt sales.
The growth trend in Respiratory category sales is expected to have continued in the fourth quarter on the back of strong demand for Trelegy Ellipta and Nucala despite the pandemic. At-home administration of these drugs has helped them remain in the positive territory. However, older respiratory drugs — Advair and Relvar/Breo Ellipta — facing competitive and pricing pressure are likely to have unfavorably impacted Glaxo’s sales.
Demand for Glaxo’s key vaccine, Shingrix, as well as other vaccines in its portfolio was significantly hampered in the past couple of quarters due to stay-at-home directives in the United States, which led to lower vaccination rates. However, these were partially offset by strong demand for flu vaccines during the third quarter. Shingrix weekly U.S. prescriptions reached prior-year levels in September. Continuation of the trend for Shingrix and flu vaccines might have benefited the segment’s sales during the fourth quarter.
Sales of meningitis vaccines, Bexsero, acquired from Novartis AG (NVS - Free Report) , and Menveo were hurt in the third quarter due to disrupted back-to-school season in the United States and lower demand across all regions. The impact of resurgence of COVID-19 infection cases on the sales of these vaccine can be gauged when the company reports its fourth-quarter results.
Sales of Glaxo’s lupus drug, Benlysta, showed impressive growth in the previous two quarters despite COVID-19 related disruption. We expect the momentum to have continued in the soon-to-be reported quarter.
Oncology sales, solely from Zejula, are also likely to have witnessed growth.
Meanwhile, 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 two-drug regimens, Juluca and Dovato, might have helped the company to partially offset some of the losses in sales of three-drug regimens.
Fourth-quarter sales of consumer healthcare business are likely to have been primarily driven by Pfizer’s (PFE - Free Report) legacy brands. Glaxo formed a joint venture with Pfizer in August 2019 to create the world’s largest consumer healthcare business. The impact of COVID-19 was mixed for this segment during the third quarter. A similar trend is likely to be reflected in the fourth-quarter result.
We expect the company to provide an update on the anticipated impact of this global crisis on its future business on the call.
Recent Key Developments
Glaxo has several programs ongoing for combating the pandemic. The company has signed supply deals with several countries for its adjuvant vaccine candidate being developed in collaboration with Sanofi. However, the companies announced a delay in the development plans of their adjuvanted recombinant protein-based COVID-19 vaccine candidate due to insufficient immune response last month. A new phase IIb study is expected to start next month with an improved antigen formulation. Meanwhile, Glaxo is also developing two antibody candidates in partnership with Vir Biotechnology for mild-to- moderate COVID-19 infection.
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for Glaxo this time around. The combination of a positive Earnings ESPand a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that is not the case here.
Earnings ESP: Glaxo has an Earnings ESP of 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at 70 cents per ADS. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Here is a large biotech stock that you may also want to consider, as our model shows that it has the right combination of elements to post an earnings beat this season.
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
Will Glaxo (GSK) Q4 Earnings Recover From Coronavirus Woes?
GlaxoSmithKline plc (GSK - Free Report) will report fourth-quarter 2020 results on Feb 3, before market open. In the last reported quarter, the company delivered earnings surprise of 17.95%.
Shares of Glaxo have underperformed the industry in the past year. The stock has declined 19% against the industry’s increase of 6.3%.
Glaxo’s earnings surpassed estimates in two of the trailing four quarters and missed the same twice, delivering beat of 8.2%, on average.
Factors to Consider
During the fourth quarter, growth in Glaxo’s revenues is likely to have been driven by new and specialty products, partially offset by weaker vaccine sales and decline in sales of Established Pharmaceuticals segment. Meanwhile, the impact of Advair generics and rising competition in the HIV segment, especially for three-drug regimens, might have hurt sales.
The growth trend in Respiratory category sales is expected to have continued in the fourth quarter on the back of strong demand for Trelegy Ellipta and Nucala despite the pandemic. At-home administration of these drugs has helped them remain in the positive territory. However, older respiratory drugs — Advair and Relvar/Breo Ellipta — facing competitive and pricing pressure are likely to have unfavorably impacted Glaxo’s sales.
Demand for Glaxo’s key vaccine, Shingrix, as well as other vaccines in its portfolio was significantly hampered in the past couple of quarters due to stay-at-home directives in the United States, which led to lower vaccination rates. However, these were partially offset by strong demand for flu vaccines during the third quarter. Shingrix weekly U.S. prescriptions reached prior-year levels in September. Continuation of the trend for Shingrix and flu vaccines might have benefited the segment’s sales during the fourth quarter.
Sales of meningitis vaccines, Bexsero, acquired from Novartis AG (NVS - Free Report) , and Menveo were hurt in the third quarter due to disrupted back-to-school season in the United States and lower demand across all regions. The impact of resurgence of COVID-19 infection cases on the sales of these vaccine can be gauged when the company reports its fourth-quarter results.
Sales of Glaxo’s lupus drug, Benlysta, showed impressive growth in the previous two quarters despite COVID-19 related disruption. We expect the momentum to have continued in the soon-to-be reported quarter.
Oncology sales, solely from Zejula, are also likely to have witnessed growth.
Meanwhile, 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 two-drug regimens, Juluca and Dovato, might have helped the company to partially offset some of the losses in sales of three-drug regimens.
Fourth-quarter sales of consumer healthcare business are likely to have been primarily driven by Pfizer’s (PFE - Free Report) legacy brands. Glaxo formed a joint venture with Pfizer in August 2019 to create the world’s largest consumer healthcare business. The impact of COVID-19 was mixed for this segment during the third quarter. A similar trend is likely to be reflected in the fourth-quarter result.
We expect the company to provide an update on the anticipated impact of this global crisis on its future business on the call.
Recent Key Developments
Glaxo has several programs ongoing for combating the pandemic. The company has signed supply deals with several countries for its adjuvant vaccine candidate being developed in collaboration with Sanofi. However, the companies announced a delay in the development plans of their adjuvanted recombinant protein-based COVID-19 vaccine candidate due to insufficient immune response last month. A new phase IIb study is expected to start next month with an improved antigen formulation. Meanwhile, Glaxo is also developing two antibody candidates in partnership with Vir Biotechnology for mild-to- moderate COVID-19 infection.
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for Glaxo this time around. The combination of a positive Earnings ESPand a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that is not the case here.
Earnings ESP: Glaxo has an Earnings ESP of 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at 70 cents per ADS. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Glaxo has a Zacks Rank #3.
GlaxoSmithKline plc Price and EPS Surprise
GlaxoSmithKline plc price-eps-surprise | GlaxoSmithKline plc Quote
Stock to Consider
Here is a large biotech stock that you may also want to consider, as our model shows that it has the right combination of elements to post an earnings beat this season.
Merck (MRK - Free Report) has an Earnings ESP of +2.21% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>