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What's in the Cards for Glaxo (GSK) This Earnings Season?
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GlaxoSmithKline plc (GSK - Free Report) is scheduled to report second-quarter 2018 results on Jul 25, before the market opens. Last quarter, the company delivered a negative surprise of 2.86%.
Shares of Glaxo have outperformed the industry so far this year. The stock has gained 16% against the industry’s decline of 1.3%.
Glaxo’s earnings performance has been pretty impressive so far. The company’s earnings surpassed estimates three times in the trailing four quarters. Overall, the company came up with an average beat of 1.41%.
Let’s see how things are shaping up for this quarter.
Factors to Consider
Glaxo should continue to see strong sales in its Pharmaceuticals and Vaccines business segments.
The company’s Pharmaceuticals segment is expected to be driven by solid sales of new HIV products, Tivicay and Triumeq. However, sales of another HIV drug, Epzicom/Kivexa, should continue to decline due to more severe generic competition, particularly affecting the European market.
Notably, the company’s latest product from the HIV portfolio, Juluca, had a strong launch uptake and generated sales of £10 million in the first quarter. We expect higher sales in Q2. Meanwhile, Juluca was approved in EU in May. This may boost sales further in Q2.
Please note that at the Q1 conference call, management said that HIV sales growth in 2018 will be lower than in 2017, despite the inclusion of sales from Juluca and a reduced drag from generic pressure on Epzicom/Kivexa. This suggests that total HIV sales could be softer than the 2017 trends in Q2.
Sales of its new respiratory drugs, the Ellipta products and Nucala, are likely to offset the declines in sales of older respiratory products, namely Seretide, Advair and Avodart. Glaxo's inhaled respiratory products, particularly the older ones, are grappling with persistent competitive and pricing pressures, which are expected to continue through 2018.
Meanwhile, many of Glaxo’s key drugs, like Lovaza for the treatment of hypertriglyceridemia and Avodart for the treatment of enlarged prostate in men, are facing a sales decline due to generic competition, a trend we expect the company to carry on in Q2 as well.
The Vaccines segment is likely to consistently benefit from a sustained uptake of meningitis vaccines like Bexsero and Menveo, acquired from Novartis AG (NVS - Free Report) .
Moreover, Glaxo’s newly launched shingles vaccine, Shingrix, approved in the United States last October, generated better-than-expected initial sales in the first quarter. In the upcoming quarter, we expect a significant contribution from this vaccine to the company’s sales. Moreover, Shingrix was approved in the EU as well as in Japan in March 2018 for the given indication, which might fetch in additional sales.
In Consumer Healthcare segment, while the Power brands should continue to do well, generic competition to Transderm Scop, a key legacy Novartis product, and the impact of the general sales tax in India will hurt sales in the segment. Additionally, in 2017, Glaxo received approvals for two other key new drugs, namely Trelegy Ellipta, which provides three medicines in a single inhaler to treat COPD, and Juluca (dolutegravir and rilpivirine), the first 2-drug regimen, once-daily, single pill for HIV. These are also expected to drive the company’s top line.
Earnings Whispers
Our proven model does not conclusively show that Glaxo is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here as you will see below.
Zacks ESP: Glaxo has an Earnings ESP of -5.19% because the Most Accurate estimate is pegged at 67 cents and the Zacks Consensus Estimate is pegged at 71cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Glaxo carries a Zacks Rank #3, which increases the predictive power of ESP. However, the company’s -5.19% ESP makes surprise prediction difficult.
We caution against Sell-rated stocks (#4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.
Bristol-Myers Squibb (BMY - Free Report) is scheduled to report earnings on Jul 26. The company has an Earnings ESP of +0.79% and a Zacks Rank of 3.
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What's in the Cards for Glaxo (GSK) This Earnings Season?
GlaxoSmithKline plc (GSK - Free Report) is scheduled to report second-quarter 2018 results on Jul 25, before the market opens. Last quarter, the company delivered a negative surprise of 2.86%.
Shares of Glaxo have outperformed the industry so far this year. The stock has gained 16% against the industry’s decline of 1.3%.
Glaxo’s earnings performance has been pretty impressive so far. The company’s earnings surpassed estimates three times in the trailing four quarters. Overall, the company came up with an average beat of 1.41%.
Let’s see how things are shaping up for this quarter.
Factors to Consider
Glaxo should continue to see strong sales in its Pharmaceuticals and Vaccines business segments.
The company’s Pharmaceuticals segment is expected to be driven by solid sales of new HIV products, Tivicay and Triumeq. However, sales of another HIV drug, Epzicom/Kivexa, should continue to decline due to more severe generic competition, particularly affecting the European market.
Notably, the company’s latest product from the HIV portfolio, Juluca, had a strong launch uptake and generated sales of £10 million in the first quarter. We expect higher sales in Q2. Meanwhile, Juluca was approved in EU in May. This may boost sales further in Q2.
Please note that at the Q1 conference call, management said that HIV sales growth in 2018 will be lower than in 2017, despite the inclusion of sales from Juluca and a reduced drag from generic pressure on Epzicom/Kivexa. This suggests that total HIV sales could be softer than the 2017 trends in Q2.
Sales of its new respiratory drugs, the Ellipta products and Nucala, are likely to offset the declines in sales of older respiratory products, namely Seretide, Advair and Avodart. Glaxo's inhaled respiratory products, particularly the older ones, are grappling with persistent competitive and pricing pressures, which are expected to continue through 2018.
Meanwhile, many of Glaxo’s key drugs, like Lovaza for the treatment of hypertriglyceridemia and Avodart for the treatment of enlarged prostate in men, are facing a sales decline due to generic competition, a trend we expect the company to carry on in Q2 as well.
The Vaccines segment is likely to consistently benefit from a sustained uptake of meningitis vaccines like Bexsero and Menveo, acquired from Novartis AG (NVS - Free Report) .
Moreover, Glaxo’s newly launched shingles vaccine, Shingrix, approved in the United States last October, generated better-than-expected initial sales in the first quarter. In the upcoming quarter, we expect a significant contribution from this vaccine to the company’s sales. Moreover, Shingrix was approved in the EU as well as in Japan in March 2018 for the given indication, which might fetch in additional sales.
In Consumer Healthcare segment, while the Power brands should continue to do well, generic competition to Transderm Scop, a key legacy Novartis product, and the impact of the general sales tax in India will hurt sales in the segment. Additionally, in 2017, Glaxo received approvals for two other key new drugs, namely Trelegy Ellipta, which provides three medicines in a single inhaler to treat COPD, and Juluca (dolutegravir and rilpivirine), the first 2-drug regimen, once-daily, single pill for HIV. These are also expected to drive the company’s top line.
Earnings Whispers
Our proven model does not conclusively show that Glaxo is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here as you will see below.
Zacks ESP: Glaxo has an Earnings ESP of -5.19% because the Most Accurate estimate is pegged at 67 cents and the Zacks Consensus Estimate is pegged at 71cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Glaxo carries a Zacks Rank #3, which increases the predictive power of ESP. However, the company’s -5.19% ESP makes surprise prediction difficult.
We caution against Sell-rated stocks (#4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.
GlaxoSmithKline plc Price and EPS Surprise
GlaxoSmithKline plc Price and EPS Surprise | GlaxoSmithKline plc Quote
Stocks to Consider
Here are a couple of health care stocks worth considering with the right combination of elements to surpass estimates this time around.
Pfizer Inc. (PFE - Free Report) is scheduled to release results on Jul 31. The company has an Earnings ESP of +0.89% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Bristol-Myers Squibb (BMY - Free Report) is scheduled to report earnings on Jul 26. The company has an Earnings ESP of +0.79% and a Zacks Rank of 3.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana. Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>