Gsk Share Discussion Threads

[mike740] 13/2/2015 13:09

From the Guardian.........

Meanwhile Glaxo has added 49p to 1534.5p after UBS moved from sell to buy with a target price raised from £12.50 to £17. The bank said:

GSK has been a difficult investment case for years, with declining earnings since 2010, as sales growth has been anaemic and the operating margin trended steadily down despite several rounds of restructuring. In 2014 GSK’s outlook dramatically deteriorated further as changes in the US pricing environment revealed the extent to which GSK’s profitability depended on US price increases; this raised concerns about sustainability of the dividend given GSK’s fast-deteriorating cash generation.

However, after a dramatic re-basing of GSK’s earnings expectations (2015-17 consensus estimates were cut by 30-32% during 2014), we believe earnings have reached an inflection point.

For the first time in over a decade, we see scope for substantial earnings growth in the coming 3-5 years, driven by new products in ViiV and Vaccines. We raise our core earnings per share for 2016-18 by 5-17%. Despite respiratory forecasts well below guidance/consensus, our 2016E-18 estimates are 5-10% ahead of consensus, and imply a 2015E-18 core earnings per share compound annual growth rate of 12% – albeit from a much reduced 2015 base of 87p. GSK’s pay-out ratio remains high, but a flat 80p dividend out to 2020 (current yield: 5.3%) now seems plausible.

Barclays was also positive on the group, saying:

Fears over declining margins due to Advair discounting along with an earnings rebase at the Capital Markets day (late second quarter) are likely to weigh on sentiment in the near-term but we remain focused on the medium to long-term outlook where two-thirds of incremental earnings before interest and tax growth is set to be driven by GSK’s non-pharma franchises consumer/vaccines/ViiV. We reiterate our overweight rating, with a revised price target of 1690p [from 1700p].

[mike740] 13/2/2015 13:00

Glaxosmithkline at "inflection point" as UBS upgrades from 'sell' to 'buy'
13 February 2015 09:45

Glaxosmithkline's shares were given a boost on Friday by UBS which upgraded its rating for the pharmaceutical stock by two notches from 'sell' to 'buy', saying that the business is now at an "inflection point".
The bank hiked its target price for the stock from 1,250p to 1,700p, saying it foresees strong growth driven by Glaxo's new products.

"GSK has been a difficult investment case for years, with declining earnings since 2010, as sales growth has been anaemic and the operating margin trended steadily down despite several rounds of restructuring," UBS said.

However, after a dramatic deterioration in the outlook in 2014 owing to US pricing concerns, earnings downgrades have now come to an end, the bank reckons.

"For the first time in over a decade, we see scope for substantial earnings growth in the coming three-five years, driven by new products in ViiV and Vaccines," the bank said.

In particular, the potential transformational impact from its Triumeq and Tivicay HIV treatments presents a "blockbuster opportunity" for the group and is currently under-appreciated by the market.

Assuming a 25% patient market share in the US by 2018, UBS now estimates that sales from Triumeq and Tivicay could together reach $4.6bn, up from its previous forecast of $2.8bn and 75% ahead of the current consensus forecast of $2.6bn.

UBS also sees strong potential in the shingles vaccine HZ/su, estimating sales of $1.4bn by 2020 which is still not reflected in consensus forecasts and Glaxo's share price.

Glaxo was trading 3.6% higher 1,539p by 10:31.

[philo124] 13/2/2015 12:44

Looks like up to 1570p.

[madengland] 13/2/2015 12:23

Thanks minerve.

[philanderer] 13/2/2015 12:11

Two notes this morning:

Barclays :

Fears over declining margins due to Advair discounting along with an earnings rebase at the Capital Markets day (late second quarter) are likely to weigh on sentiment in the near-term but we remain focused on the medium to long-term outlook where two-thirds of incremental earnings before interest and tax growth is set to be driven by GSK’s non-pharma franchises consumer/vaccines/ViiV. We reiterate our overweight rating, with a revised price target of 1690p [from 1700p].


UBS:

GSK has been a difficult investment case for years, with declining earnings since 2010, as sales growth has been anaemic and the operating margin trended steadily down despite several rounds of restructuring. In 2014 GSK’s outlook dramatically deteriorated further as changes in the US pricing environment revealed the extent to which GSK’s profitability depended on US price increases; this raised concerns about sustainability of the dividend given GSK’s fast-deteriorating cash generation.

However, after a dramatic re-basing of GSK’s earnings expectations (2015-17 consensus estimates were cut by 30-32% during 2014), we believe earnings have reached an inflection point.

For the first time in over a decade, we see scope for substantial earnings growth in the coming 3-5 years, driven by new products in ViiV and Vaccines. We raise our core earnings per share for 2016-18 by 5-17%. Despite respiratory forecasts well below guidance/consensus, our 2016E-18 estimates are 5-10% ahead of consensus, and imply a 2015E-18 core earnings per share compound annual growth rate of 12% – albeit from a much reduced 2015 base of 87p. GSK’s pay-out ratio remains high, but a flat 80p dividend out to 2020 (current yield: 5.3%) now seems plausible.

[minerve] 13/2/2015 11:58

Madengland

I wouldn't take your sell as negative, it could have moved further downwards. I do what you did all the time. I am NOT in agreement with the buy and hold brigade. If I were you I wouldn't let that mistake play on your mind or your confidence. Move on, forget about it.

Here is a book that you might find useful:

The Market Maker's Edge by Josh Lukeman.

It is aimed at day trading, but don't let that put you off. I don't day trade, I would say I am a conservative long-term investor, but I don't let ANY of my investments 'sit' so I trade around the edges of my core holdings and my capital position never goes negative without me letting it.

The ONLY thing you can control once your investment is made is your exit. If you plan your investment, having already decided your exit, you will not lose much.

[anhar] 13/2/2015 11:43

Thanks. I have a number of radical views which I've expressed over time here, one of which is the above, but most don't believe them. That's how I know I'm probably right. :~)

[atlantic57] 13/2/2015 10:51

anhar a very interesting post.

[roundup] 13/2/2015 10:49

The prospects of interest rates falling even further might have some bearing. Good div. and a safe haven.

[woodhawk] 13/2/2015 10:47

At least you had the honesty to fess up!!

[madengland] 13/2/2015 10:46

Yes wood hawk, quite so and thanks for another handful of salt into my small self inflicted wound

[woodhawk] 13/2/2015 10:27

Try and make yourself richer, Madengland, not your broker!

[anhar] 13/2/2015 10:27

I do not understand these price movements !

As GSK Is a big Company presumably it would take substantial volume to move the price either way!

The overwhelming majority of price movements, especially in very large companies like this, have no reason. They are simply the net result of supply and demand by all the pros like pension fund managers etc. who create the volume. Because these pros all have different reasons for buying or selling, the net effect is that there is no single reason in most cases.

As you suggest, small private investor trades are irrelevant to large cap share pricing but it's a failing of many PIs to imagine that there must always be a reason for every price movement when there very rarely is. So it's usually a question with no answer. Despite that, small investors are so desperate to believe that there must be a reason that someone usually trots out some explanation, no matter how lame, to satisfy the PIs.

So don't worry that you do not understand the price movements because there is nothing to understand in most instances.

[madengland] 13/2/2015 10:24

Must confess my little sell was a mistake, and I think I knew it. Should know better to play trading games which tend not to work for me. Luckily the profit I've made more than covers the little loss I generated. Am back in.

[mike740] 13/2/2015 10:20

13 Feb 2015 GlaxoSmithKline PLC GSK Barclays Capital Overweight 1,536.75 1,485.50 1,700.00 1,690.00 Reiterates

SP TARGET 1690p

[philanderer] 13/2/2015 10:19

Here`s the detail from the Telegraph re UBS..

"...We upgrade the shares to Buy from Sell, and set our new price target at £17.00 vs 12.50 previously. Two events in the last two months have greatly changed GSK's earnings outlook, in our view: the successful launch of Triumeq in the US, as well as the very impressive phase III headline data for the Zoster vaccine on 18 December 2014. We believe that those two events should drive substantial top-and bottom-line growth at GSK in coming years"

[woodhawk] 13/2/2015 10:14

I thought that pull back yesterday was well overdone and looked orchestrated. Luckily, I backed my own judgement and topped up at £14.83 - just in time for next week's 23p divi too.

[cyberian] 13/2/2015 10:08

Woodhawk...it looks as though UBS were the interested party who wanted to recommend the BUY signal at a lower level yesterday, and maybe loaded-up...who knows? The fall was quite overdone when the market backdrop and political events were looking promising.

[tradermichael] 13/2/2015 09:50

1250 to 1700 is an outrageous change of mind!

[toffeeman] 13/2/2015 09:41

Hi Dave - where in Devon - the best place there is to live

[daveofdevon] 13/2/2015 09:36

For details of the UBS upgrade see Telegraph webchat today. They have moved from sell and a target of 1250 to buy and target 1700

[cyberian] 13/2/2015 09:33

Looks like it wants to go higher....agree Woodhawk about the shake-out particularly yesterday. Seems a bit naughty but this is what happens, I guess.

[atlantic57] 13/2/2015 09:32

I do not understand these price movements !

As GSK Is a big Company presumably it would take substantial volume to move the price either way!

[woodhawk] 13/2/2015 09:28

I think there's a big buyer(s) about - hence shake out of weak holders last day or so.

[allch2] 13/2/2015 09:24

Don't know details but apparently ubs have gone from sell to buy this morning