Financial Trading Blog
Stock of the day 28/01/2016 – GlaxoSmithKline PLC
Though overall 2015 was a fairly rough year for Glaxo, since its third quarter results at the end of October the stock has been relatively stable, bouncing between £13 and £14. That Q3 report saw the company impress investors with a 9% jump in sales to £6.13 billion, just higher than the £6.08 billion analysts had been looking for. Less impressive was an 18% fall in core earnings per share to 23p; however, even that was still greater than the 19.3p forecast. The most eye-catching figure was the 65% surge in sales of Glaxo’s HIV drugs, produced by ViiV Healthcare (which GSK came incredibly close to spinning off during 2015), making it arguably the key division in the company’s arsenal.
(Source: IT-Finance.com 28/01/2016)
All of this helped Glaxo rise to £14.26, its highest points since mid-August, just before that month’s Chinese chaos eroded prices across the entire market. However, the stock soon fell from this peak, with news from an R&D event at the start of November that the company plans to file up to 20 new drugs for regulatory approval before 2020 underwhelming investors who still have serious concerns about Glaxo’s ability to deal with asthma-drug Advair’s falling sales.
By the middle of November the stock had fallen to £13.04, and whilst it rose back to the £13.80s by the start of December, 2 weeks later it had plunged to a 2 and a half month low of £12.77. Yet a savvy acquisition soon got the stock back on track; news that Glaxo had bought $1.4 billion in HIV drug development assets from Bristol-Myers Squibb for its increasingly vital ViiV Healthcare department lifted the company to £13.97 by the end of 2015.
Since the New Year began Glaxo has managed to deal with the market turmoil relatively well, and, despite rumours that the company is being pressured to find a new CEO, it has actually climbed to a current trading price, and 5 and a half month high, of £14.35 (IT-Finance.com, 28/01/2016).
GlaxoSmithKline PLC has a consensus rating of ‘Hold’ with an average target price of £14.99.
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