Eyes Down For GlaxoSmithKline plc Results

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.

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