Gsk Share Discussion Threads

[solomon] 26/7/2017 15:16

Probably better, as you say TM1, to take a cautious attitude to free cash flow changes in the future but the board does state "Over time, as free
cash flow strengthens, it (the board)intends to build free
cash flow cover of the annual dividend to a target
range of 1.25-1.50x, before returning the dividend
to growth. "
So dividend growth is also a possibility.

[grahamite2] 26/7/2017 15:15

Well done chaps. You did say that 1550 was the level to buy. I'm disappointed not to have saved the extra 40p but c'est la vie.

[alphorn] 26/7/2017 15:14

I understand what they meant about forex in my post #614.
No change to my long positions.

[tradermichael] 26/7/2017 15:12

Yes, I just bagged a few at 1546.76 ....... ;0)

[ny boy] 26/7/2017 15:08

Added £10k @ 1550p, happy with that as don't need to sell and imho way over sold. Divi is attractive for holding at these low levels. GL

[tradermichael] 26/7/2017 15:00

Good move - I'd expect a bounce from the mid-1500's. I am surprised by the amount of the decline in share price recently (notwithstanding today ....).

I have a longer term concern over the dividend. The objective of rebuilding dividend cover from 1.25x to 1.5x towards 2020 could mean that after 2018 (80p probably safe), there could be a cut in dividend if free cash flow doesn't improve.

[essentialinvestor] 26/7/2017 14:54

I'm adding in small amounts, just lots of 250 shares,
which is probably pocket change for the likes of Michael,
or a night out for Monty ).

[tradermichael] 26/7/2017 14:00

Yes, the dividend looks safe (for now ....), but I'm not happy with stopping 30 pre-clinical and clinical programmes ....... ;0(

[solomon] 26/7/2017 13:54

What would Anhar have said? "Nothing here changes my view".

[philanderer] 26/7/2017 13:37

UBS note...


Q: How did the results compare vs expectations?
A: GSK reported 2Q17 sales of £7,320m (+1% vs cons), adj. operating profit of £2,083m (+2.3% vs cons), adj. EPS of 27.20p (+3.4% vs cons). Sales surprise seems to drop through to EBIT.

Q: What were the most noteworthy areas in the results?
A: Company reported 2Q17 sales of £848m for Advair (+1.3% vs cons), £988m for their dolutegravir franchise (Tivicay & Triumeq, +6.7% vs cons), and £1,111m for Vaccines (+2.9% vs cons). Consumer was weaker than expected (-2% v cons).

GSK previously guided for 5-7% adjusted EPS growth (with no US Advair generics),
now lowered to 3-5% reflecting the impact of a Priority Review voucher and investments. Long term guidance remains unchanged despite incremental savings.

Q: How would we expect investors to react?
A: We expect stock to react negatively given the lack of change to long-term guidance despite incremental savings suggests tougher underlying trends.

[essentialinvestor] 26/7/2017 12:48

Monty, respiratory looks strong imv.
That coupled with another £1 billion on costs by 2020 looks a positive.
Yield remains an attraction.

We got down to the low 1540's on the last update, from memory.

Sharper focus to the business now going forward.

[montyhedge] 26/7/2017 12:27

1520p looks a certainty.

[grahamite2] 26/7/2017 12:19

Solomon, I assume the increased valuations lead to increases in the contingent considerations i.e. liabilities.

Transaction-related adjustments resulted in a net
charge of GBP1,226 million (Q2 2016: GBP1,798 million).
This primarily reflected accounting charges for the
re-measurement of the liability and the unwinding
of the discounting effects on the contingent consideration
related to the acquisition of the former Shionogi-ViiV
Healthcare joint venture, the contingent consideration
related to the acquisition of the former Novartis
Vaccines business, and the value attributable to
the Consumer Healthcare Joint Venture put option
held by Novartis.

However, you'd have thought the increased valuations would be greater than the increased contingent consideration, unless these are very oddly structured deals, so some mystery remains.

[montyhedge] 26/7/2017 12:17

Lowering guidance is that a mini profit warning?

[essentialinvestor] 26/7/2017 12:12

Following the pattern of the Q1 atm.

[montyhedge] 26/7/2017 12:09

Disappointing I thought, going lower.

[dr biotech] 26/7/2017 11:55

The Board intends to maintain the dividend for 2018
at the current level of 80p per share, subject to
any material change in the external environment
or performance expectations. Over time, as free
cash flow strengthens, it intends to build free
cash flow cover of the annual dividend to a target
range of 1.25-1.50x, before returning the dividend
to growth.


I read this as the div will be 80p a year, until earnings rise. So a solid hold for those of us that want income.

[dstorey1] 26/7/2017 11:52

Hopefully cap appreciation up to 10/08.

[ny boy] 26/7/2017 11:46

Made so much cash elsewhere in the markets, more than happy to add to these, for a 2-5 year hold.

[solomon] 26/7/2017 11:46

grahamite2 - you mean this bit:
"Total Q2 loss per share of 3.7p reflecting charges
resulting from increases in the valuation of
Consumer and HIV businesses and new portfolio
choices "
I was wondering about that too, but I am not anywhere near a worthwhile accounts reader.
And how does an increase in valuation lead to a loss?

[essentialinvestor] 26/7/2017 11:37

Solomon indeed, find it impossible to take in quickly,
then again I'm a bit slower these days!.

The hedge funds and their algos are making decisions in milliseconds.

[solomon] 26/7/2017 11:31

7.4 billion revenue across 3 divisions as opposed to 7.27 expected. Too much information but that's what I saw first.
'Market' still reading through the figures

[grahamite2] 26/7/2017 11:30

I wonder if anyone can help me with this. GSK makes a statutory profit annually, but this quarter it has a small statutory loss - OK, no problem - but it did last year too. Is Q2 the quarter when they book losses?

[essentialinvestor] 26/7/2017 11:13

So we have the extended cost reduction programme,
the target of £1 billion is above where I thought they would aim for.

They appear to be making a huge "bet" on respritory and HIV.

Otherwise an avalanche of info, difficult to assess quickly.

[ny boy] 26/7/2017 11:06

Load up, load up with rubber bullets!