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Glaxo (GSK) to Report Q3 Earnings: What's in the Cards?

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GlaxoSmithKline plc GSK will report third-quarter 2021 results on Oct 27, before market open. In the last reported quarter, the company delivered an earnings surprise of 46.30%.

Shares of Glaxo have underperformed the industry so far this year. The stock has gained 8% compared with the industry’s increase of 11.6%.

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Glaxo’s earnings surpassed estimates in two of the trailing four quarters, missed the same once and matched it once, delivering a beat of 13.21%, on average.

Factors to Consider

During the third quarter, Glaxo’s revenues are likely to have been driven by newer respiratory and HIV drugs, partially offset by a decline in Established Pharmaceuticals segment sales. The impact of Advair generics and rising competition for the older HIV drugs, especially the three-drug regimens, might have hurt sales. The recovery in vaccine sales during the second quarter is likely to have continued in the soon-to-be-reported quarter, driving revenues higher. Some impact of the pandemic might have continued to hurt sales in the third quarter. The Zacks Consensus Estimates for revenues stands at $11.92 billion.

The growth trend in Respiratory category sales is expected to have continued in the third quarter on the back of a strong demand for Trelegy Ellipta and Nucala despite the pandemic. At-home administration of these drugs has helped them remain in the positive territory. The label expansion of Nucala in chronic rhinosinusitis in July is likely to have boosted sales of the drug during the third quarter. However, older respiratory drugs — Advair and Relvar/Breo Ellipta — that face competitive and pricing pressure are likely to have unfavorably impacted Glaxo’s respiratory sales.

Glaxo’s vaccine sales recovered during the second quarter on the back of strong demand for its key vaccine, Shingrix, in the United States, higher sales of meningitis and DTPa-containing vaccines and higher pandemic adjuvant sales. The trend is likely to have continued in the third quarter.However, COVID-related restrictions amid spread of Delta variant in the third quarter and vaccination prioritization may have adversely impacted sales of some of the vaccines.

Sales of Glaxo’s lupus drug, Benlysta, showed impressive growth in the previous two quarters despite COVID-related disruption. We expect the momentum to have continued in the soon-to-be-reported quarter. The drug’s approval in Europe in May is likely to have boosted sales during the third quarter.

Oncology sales, comprising Zejula and Blenrep, are also likely to have witnessed growth. The uptake of the newly-approved Jemperli remains to be seen.

The competitive environment and the shift in portfolio toward two-drug regimens may have hurt sales of three-drug regimens — Tivicay and Triumeq — and older HIV drugs. However, the strong growth trend witnessed in two-drug regimens, Juluca and Dovato, might have helped the company partially offset some of the losses in sales of the three-drug regimens.

Third-quarter sales of consumer healthcare business are likely to have continued the recovery momentum from the second quarter. The company had anticipated more normal consumer trends in the second half of the year. It may shed light on the forthcoming trends in the consumer healthcare business on its third-quarter earnings call.

The company will also likely provide updates related to the demerger of Consumer Healthcare business anticipated in mid-2022 on the call.

GlaxoSmithKline plc Price and EPS Surprise

GlaxoSmithKline plc Price and EPS Surprise
GlaxoSmithKline plc Price and EPS Surprise

GlaxoSmithKline plc price-eps-surprise | GlaxoSmithKline plc Quote

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for Glaxo this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that is not the case here.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate of 79 cents per ADS and the Zacks Consensus Estimate of 80 cents, is -1.67%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Glaxo has a Zacks Rank #3.

Stocks to Consider

Here are some large pharma/biotech stocks that you may also want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season.

Pfizer PFE has an Earnings ESP of +2.33% and a Zacks Rank #2. You can seethe complete list of today’s Zacks #1 Rank stocks here.

Vertex Pharmaceuticals VRTX has an Earnings ESP of +10.62% and a Zacks Rank #2.

Eli Lilly LLY has an Earnings ESP of +0.76% and a Zacks Rank #3.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

GlaxoSmithKline plc (GSK) : Free Stock Analysis Report

Pfizer Inc. (PFE) : Free Stock Analysis Report

Eli Lilly and Company (LLY) : Free Stock Analysis Report

Vertex Pharmaceuticals Incorporated (VRTX) : Free Stock Analysis Report

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