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What GlaxoSmithKline’s 3Q17 Performance Tells Us

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Oct. 18 2017, Updated 6:42 a.m. ET

A look at GlaxoSmithKline

Headquartered in the UK, GlaxoSmithKline (GSK) is a British multinational pharmaceutical company that has three business segments: Pharmaceuticals, Vaccines, and the Consumer Healthcare. GSK reports its revenues in British pounds.

GSK stock fell ~4.7% in 3Q17 but has risen ~6.0% YTD (year-to-date) as of October 16.

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Analysts’ recommendations

Wall Street analysts estimate that GSK stock has the potential to return ~13.6% over the next 12 months. These recommendations show a 12-month target price of $46.33 per share, compared with $41.01 per share on October 13.

Of the four analysts tracking GlaxoSmithKline ADRs (American depositary receipts), two recommend a “buy,” while two recommend a “hold.” Of the 30 analysts tracking the GSK stock, 13 recommend a “buy,” while 15 recommend a “hold,” and two recommend a “sell.”

The consensus rating for GSK stock stands at 2.5, which represents a “strong buy” for value investors.

Analysts’ revenue estimates

GlaxoSmithKline’s revenues are mainly driven by a strong operational performance across all its segments.

Wall Street analysts estimate that GSK will see revenues of 7.9 billion pounds in 3Q17, which would represent a 4.8% year-over-year rise in revenues, and earnings per share of 31.69 pence for 3Q17.

To divest company-specific risks, investors can consider ETFs like the BLDRS Developed Markets 100 ADR ETF (ADRD), which has 2.4% of its total assets in GlaxoSmithKline ADRs (GSK). ADRD also has 2.1% in Novo Nordisk ADRs (NVO), 2.7% in Sanofi ADRs (SNY), and 5.5% in Novartis ADRs (NVS).

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