Eyes Down For GlaxoSmithKline plc Results

Under the weight of bribery allegations, GlaxoSmithKline plc (LON: GSK) will be bringing us interim figures.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

gskGlaxoSmithKline (LSE: GSK) (NYSE: GSK.US) has been overshadowed a bit of late by takeover attempts at rival AstraZeneca, and its share price has lagged a little — it’s been see-sawing all year and is down around 8% over the past 12 months, to 1,550p.

There’s also a fall in earnings per share (EPS) forecast for the year to December 2014, but the City is expecting a recovery of similar proportions in 2015.

With the market not really knowing what to make of Glaxo right now, first-half results due on 23 July should hopefully help shape our thoughts.

Uncertain first quarter

The pharmaceutical giant’s Q1 figures, released on 30 April, gave us some cause for mixed feelings, with a 2% rise in core EPS at constant exchange rates (CER), to 21p. But that was a little overshadowed by a 20% fall in sterling terms. Total EPS fell 4% at CER and by 30% in sterling.

The company did at least see sales growth in all markets except the US, where it blamed a 10% fall on “competition in respiratory market and quarterly volatility in wholesaler/retailer stocking patterns“.

But the key message at the time was that Glaxo is in a period of change, with chief executive Sir Andrew Witty talking of “the transition we are making to new products in our core franchises of Respiratory and HIV, further R&D delivery and the 3-part transaction we announced last week with Novartis“.

And looking forward, he said “With around 40 NMEs currently in phase II/III development, GSK’s late-stage pipeline remains attractive and we expect the next wave of innovative R&D opportunities to become more visible as this year progresses“.

Bribery accusations

But the pipeline and the firm’s financial picture will not be the only things on investors’ minds right now, not after we heard in May that the UK’s Serious Fraud Office had opened a formal investigation into the company’s commercial practices. That came after Glaxo staff in China had been accused of bribing government and hospital officials, and there are investigations ongoing in Poland too.

For legal reasons the company might not be in a position to say much, if anything, about these issues, but whatever they might be able to say along with their results would be welcome.

Shares look good value

In the meantime, we’re looking at a company that’s predicted to pay a 5.2% dividend yield this year followed by 5.4% next, on a relatively modest P/E of 15 falling to 14. Dividends will probably only be covered around 1.2 to 1.3 times by earnings, mind.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Alan Oscroft has no position in any shares mentioned. The Motley Fool recommends GlaxoSmithKline.

More on Investing Articles

Investing Articles

Could the JD Sports Fashion share price double in the next five years?

The JD Sports Fashion share price has nearly halved in the past five years. Our writer thinks a proven business…

Read more »

Bus waiting in front of the London Stock Exchange on a sunny day.
Investing Articles

If interest rate cuts are coming, I think these UK growth stocks could soar!

Falling interest could be great news for UK growth stocks, especially those that have been under the cosh recently. Paul…

Read more »

Investing Articles

Are these the best stocks to buy on the FTSE right now?

With the UK stock market on the way to hitting new highs, this Fool is considering which are the best…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Can the Centrica dividend keep on growing?

Christopher Ruane considers some positive factors that might see continued growth in the Centrica dividend -- as well as some…

Read more »

Smiling family of four enjoying breakfast at sunrise while camping
Investing Articles

How I’d turn my £12,000 of savings into passive income of £1,275 a month

This Fool is considering a strategy that he believes can help him achieve a stable passive income stream with a…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

2 top FTSE 250 investment trusts trading at attractive discounts!

This pair of discounted FTSE 250 trusts appear to be on sale right now. Here's why I'd scoop up their…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

3 things that could push the Lloyds share price to 60p and beyond

The Lloyds share price has broken through 50p. Next step 60p? And then what? Here are some thoughts on what…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

£1,000 in Rolls-Royce shares a year ago would be worth this much now

Rolls-Royce shares have posted one of the best stock market gains of the past 12 months. But what might the…

Read more »