GSK – Strong first quarter prompts another upgrade
- Q1 Revenue up 10% to £7.4bn
- Operating profit up 27% to £2.4bn
- Full year revenue guidance upgraded
Derren Nathan, head of equity research, Hargreaves Lansdown:
“GSK has started 2024 in rude health. Strong growth in vaccine and speciality medicines drove a double digit rise in group sales. Prudent cost management has allowed underlying earnings to rise at a faster rate. But the one cost line GSK has been investing in is R&D. That’s pleasing to see given the clinical success emerging from the pipeline. With four positive phase III read outs so far this year the odds of further approvals are on the increase. And in the vaccines space applications for additional authorisations for RSV jab Arexvy and Shingles injection Shingrix could help accelerate the uptake of two important products.
The strong quarter has prompted the second upgrade of the year. Revenue growth’s now expected at the upper end of the 5%-7% range and underlying profit growth guidance has shifted rightwards from 7%-10% to 9%-11%. GSK’s valuation lags the peer group, with the Zantac litigations continuing to cast a shadow. GSK won’t put a number on the potential liability but external estimates suggest the potential downside is more than priced in. The next update from the key Delaware hearing will relate only to the admissibility of evidence so it could be a while before more clarity emerges. But, under all that, it’s hard to fault ongoing financial and clinical progress.”
