GLAXF - GSK: Good Earnings Report But Risks Ahead (Rating Downgrade)
2024-07-31 13:29:45 ET
Summary
- GSK's H1 2024 earnings report is strong, with healthy sales growth, solid core EPS increase, and upgraded outlook, resulting in attractive market multiples.
- However, the outlook still indicates that investors need to brace for a weak H2 2024, with Arexvy's sales worth watching out for after they slipped up in H1 2024.
- Along with the potential negative impact from further developments in Zantac trials, the expected disappointing earnings figures indicate risks to price over the coming months.
Since I wrote about the pharmaceuticals company GSK ( GSK ) in January, its price hasn't seen any notable change, with a price 1.5% correction as I write. However, there has been a lot of price movement during this time. Two specific trends stand out:
- In the days following the release of its first quarter (Q1 2024) results , the stock rose to the highest levels since July 2022. The fact that price was up by over 16% by mid-May from the time I wrote puts it in further perspective.
- However, the ghost of Zantac related trials effectively spooked investors once more in early June. 75,000 cases alleging that the heartburn drug causes cancer were allowed to go ahead. GSK's price plunged almost 9% on the same day. And it has remained relatively weak since.