GlaxoSmithKline’s revenue estimates
Analysts expect a growth of ~7.8% in GlaxoSmithKline’s (GSK) 2Q16 revenues, to 6.4 billion British pounds. This follows strong product launches and improvements in the supply chain. The Novartis (NVS) deal will also add revenues to the Vaccines and Consumer Healthcare segments. These factors will have a long-term effect, and analysts estimate a year-over-year growth of ~13.6% and 10.9% for 3Q16 and 4Q16, respectively. On an annual basis, the estimates show a growth of ~9.9% for 2016 and ~4.4% for 2017.
The above chart shows revenues for GlaxoSmithKline over the last few quarters and estimates for 2Q16. There are various factors affecting these expectations for future revenues, which will be discussed in the coming parts of this series.
Segment-wise expectations for 2Q16
GSK’s business is divided into three business segments:
- Consumer Health
The Pharmaceuticals segment’s revenues have shifted due to product performance and declined due to lower sales of key products Seretide and Advair. They were partially offset by increasing revenues from new products and HIV products Triumeq and Tivicay. Also, the divestment of the oncology business to Novartis (NVS) will have a negative impact on the revenues and profitability of this segment for the coming years. Further details on the segment’s products and therapeutic areas are discussed later in the series.
The inorganic growth through the acquisition of Novartis’s meningitis vaccines and other vaccines portfolio in March 2015 has increased exposure and revenues for GSK’s Vaccines segment. Revenues for the segment are expected to increase during 2Q16. Meningitis vaccines have lower profit margins, so they are expected to impact the overall profitability of this segment.
Consumer health revenues are expected to have a positive growth, following the increased sales of Flonase, Excedrin, Theraflu, and oral health products under the Sensodyne brand. Skin health products are also expected to add to the revenue growth during 2Q16.
To divest risk, investors could consider First Trust Value Line Dividend ETF (FVD), which has an exposure of ~0.54% to GlaxoSmithKline, 0.55% to Merck & Co. (MRK), and 0.56% to both Amgen (AMGN) and Novartis.