GSK beats the Street on top and bottom lines
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GSK beats the Street on top and bottom lines

Pharmaceutical giant GlaxoSmithKline (GSK) reported earnings last week that beat the Street’s predictions for top- and bottom-line growth. The company, which is one of the healthcare industry’s largest players, has been reshaping its business since completing a 2015 transaction with peer Novartis. At the helm of this transformation is superstar CEO Emma Walmsley, whose strategies have proved popular with investors and analysts alike.

GlaxoSmithKline’s share price has risen by 6% year to date

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Source: Yahoo Finance

GSK said that earnings per share for the fourth quarter of 2018 came in at 80 cents. This is an easy beat against consensus estimates for earnings of 70 cents per share. The company beat the Street’s predictions on revenue with similar ease: GSK reported year on year revenue growth of 5% t0 $10.54 billion. Analysts had been looking for revenue of $9.85 billion.

A major focus for Walmsley and her team over the quarter (and the year that preceded it) was rejuvenation of GSK’s oncology business. Discussing the strength of the quarter just gone, Walmsley chose to focus on this area, saying: “we have seen good progress in 2018 in operational performance, in reshaping the portfolio, and in strengthening the pipeline, and we'll be building on this progress in 2019. In innovation, we will be focused on strengthening the pipeline further, particularly our growing portfolio of assets in oncology.”

Proof of that assessment came just the day before earnings were released, when GSK announced it was working with Merck KGaA to develop experimental immunotherapy treatments to tackle a number of cancer types. A month earlier, GSK completed a $5.1 billion acquisition of Tesaro – once more for novel cancer-killing drugs.

Disclosure

Dominion holds GlaxoSmithKline in its Global Trends Managed Fund.


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