4Q15 analyst estimates
With the launch of promising products across segments and a strong pipeline, GlaxoSmithKline (GSK) expects to generate 0.38 pounds in EPS (earnings per share) on sales of 6.36 billion pounds in 4Q15. This translates into a year-over-year growth of ~3%, which is higher than the decline of ~10.5% in 4Q14. The company’s EPS is estimated to be around 0.38 pounds for 1Q16 and 0.35 pounds for 2Q16.
For 2015, analysts estimate EPS of 1.52 pounds. For 2016, the company expects a significant recovery in its core EPS at constant exchange rates, with double-digit percentage growth due to the reducing effects of supply limitations as well as synergy benefits from Novartis transaction. For 2016, the EPS is estimated at 1.70 pounds. For 2017, its EPS is estimated at 1.81 pounds.
The gross margin is expected to remain constant at around 68.2% in 2015 over 2014 but is projected to improve to 68.3% in 2016. The gross margin has not improved due to lower profitability of acquired vaccines and consumer healthcare products against divested oncology products. The operating profit margin is expected to decrease to ~24.1% in 2015 from 26.2% in 2014, and it should improve to 25.7% in 2016.
GlaxoSmithKline forms about 4.7% of total assets of the SPDR S&P International Health Care Sector ETF (IRY), while Novartis AG (NVS) forms about 12.8%, Sanofi (SNY) forms about 5.8%, and Novo Nordisk (NVO) forms about 5.3% of the total assets of IRY. Investors can consider ETFs like the PowerShares International Dividend Achievers ETF (PID) or the VanEck Vectors Pharmaceutical ETF (PPH) for broad-based exposure.