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GlaxoSmithKline’s 1Q17 Earnings Surpass Analysts’ Estimates

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GlaxoSmithKline’s revenues

GlaxoSmithKline (GSK) reported growth of 19% to 7.4 billion pounds in its 1Q17 revenues. The company met Wall Street analysts’ 1Q17 estimates for revenues and earnings per share (or EPS) and reported EPS of 25 pence on revenues of 7.4 billion pounds against the estimated EPS of 25 pence at revenues of 7.3 billion pounds in its 1Q17 earnings release on April 26, 2017.

The above chart shows the revenue trend for GSK over the last few quarters.

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Stock performance

GlaxoSmithKline’s stock price fell ~1.9% to $40.68 on April 26, 2017, compared to the previous day’s close of $41.48. Plus, the stock price rose to $40.78 on April 28, 2017, due to investors’ positive response to 1Q17 earnings. Overall, GlaxoSmithKline’s stock price has fallen nearly 5.9% during the last 12 months.

1Q17 performance

GlaxoSmithKline’s top line rose 19% to ~7,384 million pounds for 1Q17, driven by an operational increase of 5% and the favorable currency impact of 14%. The increase in revenues was mainly driven by the new pharmaceutical and vaccines products added to its portfolio. The positive impact of foreign exchange was due to the weakening of the pound against all major currencies of developed countries.

Geographically, the US markets contributed nearly 35.5% of total revenues at 2.6 billion pounds for 1Q17, an 11% growth at constant exchange rates as compared to 1Q16. The European markets contributed nearly 27.1% of total revenues at 2.00 billion pounds for 1Q17, nearly flat revenues at constant exchange rates as compared to 1Q16. The contribution from international markets was nearly 37.4% of total revenues at 2.76 billion pounds for 1Q17, a 4% increase in revenues as compared to 1Q16. The increase in revenues across all geographical areas was due to the strong performance of new pharmaceutical products including HIV products and vaccines products.

To divest the risk, investors can consider ETFs like the First Trust Value Line 100 ETF (FVL), which holds 0.9% of its total assets in GlaxoSmithKline. FVL also holds 1.1% of its total holdings in Teva Pharmaceuticals (TEVA), 1.2% in Valeant Pharmaceuticals (VRX), and 1.1% in AstraZeneca (AZN).

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