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GSK Q3 Earnings Top, Stock Down on Lowered '24 View for Vaccine Sales
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GSK plc (GSK - Free Report) reported third-quarter 2024 core earnings of $1.27 per American depositary share (ADS), which beat the Zacks Consensus Estimate of $1.16. Core earnings declined 1% year over year on a reported basis but rose 5% at a constant exchange rate (CER).
Quarterly revenues fell 2% on a reported basis but rose 2% at CER to $10.42 billion (£8.01 billion). The top line missed the Zacks Consensus Estimate of $10.65 billion. This was due to lower sales of RSV and shingles vaccines in the United States.
All growth rates mentioned below are on a year-over-year basis and at CER.
GSK reports under three segments — General Medicines, Specialty Medicines and Vaccines. Sales in the Specialty Medicines and General Medicines segments rose 19% and 7%, respectively. Vaccine sales declined 15%.
GSK Specialty Medicines Sales
HIV sales rose 12% during the quarter, driven by the strong patient demand for the company’s two-drug regimens — Dovato and J&J (JNJ - Free Report) -partnered Juluca — and long-acting medications — Apretude and Cabenuva. The combined revenues from these four drugs contributed nearly 60% to the total HIV sales during the quarter.
Sales of Dovato rose 23%, while that of the J&J-partnered Juluca fell 1%. Since their commercial launch, both these medications have been eroding the sales and market share of the company’s three-drug regimens — Triumeq and Tivicay. While Triumeq sales declined 10%, sales of Tivicay rose 2% during the quarter.
Sales of Apretude and Cabenuva rose 95% and 40%, respectively.
Sales of the respiratory drug Nucala were up 12% during the quarter, driven by growth across the markets, especially in the ex-U.S. territories.
Sales of the immuno-inflammation drug Benlysta were up 16% in the quarter, reflecting strong product demand across all regions.
Oncology sales rose 94%, driven by strong patient demand for Jemperli, Ojjaara and Zejula. Jemperli added £130 million to GSK’s top line compared with £108 million in second-quarter 2024, driven by new patient starts across all regions. Zejula sales rose 6% in the quarter.
New blood cancer drug Ojjaara/Omjjara generated £98 million in product sales compared with £85 million in second-quarter 2024. While the drug was approved by the FDA in September 2023, it received approval in the EU in January.
GSK did not generate any sales from Vir Biotechnology (VIR - Free Report) -partnered Xevudy during the quarter.
GSK General Medicines
In this segment, the upside was primarily driven by solid sales growth of asthma inhaler Trelegy Ellipta across all regions. The upside was partially offset by the removal of the Average Manufacturer Price cap on Medicaid drug prices in the United States, adversely impacting sales of some established drugs.
Sales of Trelegy Ellipta and Anoro Ellipta surged 16% and 6%, respectively. Sales of Advair/Seretide and Revlar/Breo Ellipta improved 13% and 5%, respectively.
GSK Vaccine Sales
The decline in vaccine sales was primarily due to lower sales of its RSV vaccine Arexvy that fell 72% during the quarter. This downtick can be attributed to the restrictive recommendation issued by the U.S. Centers for Disease Control and Prevention earlier this year for individuals in the 60-74 age bracket.
Sales of the company’s shingles vaccine, Shingrix, fell 7% during the quarter due to lower demand in the U.S. market. This was partially offset by rising sales in the International markets.
In Meningitis vaccines, sales of Bexsero and Menveo rose 30% and 7%, respectively. Sales of the influenza vaccine, Fluarix, were down 22%. Sales of Established vaccines improved 10%.
During the quarter, GSK did not record any sales from the COVID-19 booster vaccine co-developed in partnership with Sanofi (SNY - Free Report) .
Operating Expenses
Core selling, general and administration (SG&A) costs fell 2% to £2.07 billion. This improvement in expenses was due to disciplined investments by management to support the global market expansion of its marketed drugs.
Core research and development expenses rose 3% to £1.43 billion, driven by continued investment by management in pipeline advancement.
GSK’s 2024 Guidance
While management still expects overall revenues to increase 7-9% at CER for the full year, it has revised its revenue guidance at the segment level.
Sales of Specialty Medicines are expected to increase in high teens percentage at CER in 2024 compared with the previously expected mid-to-high teens percentage growth. Management expects mid-single digit percentage growth at CER in the General Medicines segment’s turnover, which was previously expected to rise by a low-to-mid single digit percentage.
For the remainder of the year, management expects a fall in Vaccine sales due to lower sales of Arexvy and Shingrix. GSK now expects sales to decline by a low-single digit percentage at CER against the previous guidance of growth in the low-to-mid single-digit percentage.
Shares were down nearly 5% in pre-market trading today, likely due to the curtailed guidance for the Vaccine segment. The stock has gained 3.0% year to date against the industry’s 3.3% decline.
Image Source: Zacks Investment Research
Management has maintained its guidance for core operating profit. The metric is still expected to grow between 11% and 13% at CER. GSK also expects its core EPS to grow in the range of 10-12% at CER.
Image: Bigstock
GSK Q3 Earnings Top, Stock Down on Lowered '24 View for Vaccine Sales
GSK plc (GSK - Free Report) reported third-quarter 2024 core earnings of $1.27 per American depositary share (ADS), which beat the Zacks Consensus Estimate of $1.16. Core earnings declined 1% year over year on a reported basis but rose 5% at a constant exchange rate (CER).
Quarterly revenues fell 2% on a reported basis but rose 2% at CER to $10.42 billion (£8.01 billion). The top line missed the Zacks Consensus Estimate of $10.65 billion. This was due to lower sales of RSV and shingles vaccines in the United States.
All growth rates mentioned below are on a year-over-year basis and at CER.
See the Zacks Earnings Calendar to stay ahead of market-making news.
GSK’s Segment Discussion
GSK reports under three segments — General Medicines, Specialty Medicines and Vaccines. Sales in the Specialty Medicines and General Medicines segments rose 19% and 7%, respectively. Vaccine sales declined 15%.
GSK Specialty Medicines Sales
HIV sales rose 12% during the quarter, driven by the strong patient demand for the company’s two-drug regimens — Dovato and J&J (JNJ - Free Report) -partnered Juluca — and long-acting medications — Apretude and Cabenuva. The combined revenues from these four drugs contributed nearly 60% to the total HIV sales during the quarter.
Sales of Dovato rose 23%, while that of the J&J-partnered Juluca fell 1%. Since their commercial launch, both these medications have been eroding the sales and market share of the company’s three-drug regimens — Triumeq and Tivicay. While Triumeq sales declined 10%, sales of Tivicay rose 2% during the quarter.
Sales of Apretude and Cabenuva rose 95% and 40%, respectively.
Sales of the respiratory drug Nucala were up 12% during the quarter, driven by growth across the markets, especially in the ex-U.S. territories.
Sales of the immuno-inflammation drug Benlysta were up 16% in the quarter, reflecting strong product demand across all regions.
Oncology sales rose 94%, driven by strong patient demand for Jemperli, Ojjaara and Zejula. Jemperli added £130 million to GSK’s top line compared with £108 million in second-quarter 2024, driven by new patient starts across all regions. Zejula sales rose 6% in the quarter.
New blood cancer drug Ojjaara/Omjjara generated £98 million in product sales compared with £85 million in second-quarter 2024. While the drug was approved by the FDA in September 2023, it received approval in the EU in January.
GSK did not generate any sales from Vir Biotechnology (VIR - Free Report) -partnered Xevudy during the quarter.
GSK General Medicines
In this segment, the upside was primarily driven by solid sales growth of asthma inhaler Trelegy Ellipta across all regions. The upside was partially offset by the removal of the Average Manufacturer Price cap on Medicaid drug prices in the United States, adversely impacting sales of some established drugs.
Sales of Trelegy Ellipta and Anoro Ellipta surged 16% and 6%, respectively. Sales of Advair/Seretide and Revlar/Breo Ellipta improved 13% and 5%, respectively.
GSK Vaccine Sales
The decline in vaccine sales was primarily due to lower sales of its RSV vaccine Arexvy that fell 72% during the quarter. This downtick can be attributed to the restrictive recommendation issued by the U.S. Centers for Disease Control and Prevention earlier this year for individuals in the 60-74 age bracket.
Sales of the company’s shingles vaccine, Shingrix, fell 7% during the quarter due to lower demand in the U.S. market. This was partially offset by rising sales in the International markets.
In Meningitis vaccines, sales of Bexsero and Menveo rose 30% and 7%, respectively. Sales of the influenza vaccine, Fluarix, were down 22%. Sales of Established vaccines improved 10%.
During the quarter, GSK did not record any sales from the COVID-19 booster vaccine co-developed in partnership with Sanofi (SNY - Free Report) .
Operating Expenses
Core selling, general and administration (SG&A) costs fell 2% to £2.07 billion. This improvement in expenses was due to disciplined investments by management to support the global market expansion of its marketed drugs.
Core research and development expenses rose 3% to £1.43 billion, driven by continued investment by management in pipeline advancement.
GSK’s 2024 Guidance
While management still expects overall revenues to increase 7-9% at CER for the full year, it has revised its revenue guidance at the segment level.
Sales of Specialty Medicines are expected to increase in high teens percentage at CER in 2024 compared with the previously expected mid-to-high teens percentage growth. Management expects mid-single digit percentage growth at CER in the General Medicines segment’s turnover, which was previously expected to rise by a low-to-mid single digit percentage.
For the remainder of the year, management expects a fall in Vaccine sales due to lower sales of Arexvy and Shingrix. GSK now expects sales to decline by a low-single digit percentage at CER against the previous guidance of growth in the low-to-mid single-digit percentage.
Shares were down nearly 5% in pre-market trading today, likely due to the curtailed guidance for the Vaccine segment. The stock has gained 3.0% year to date against the industry’s 3.3% decline.
Image Source: Zacks Investment Research
Management has maintained its guidance for core operating profit. The metric is still expected to grow between 11% and 13% at CER. GSK also expects its core EPS to grow in the range of 10-12% at CER.
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GSK's Zacks Rank
GSK currently has a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.