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Why GlaxoSmithKline Stock Rose in the Week Ended March 29

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GlaxoSmithKline’s stock price trends

On March 29, 2018, GlaxoSmithKline (GSK) was trading at $39.42, which represented a ~13% rise from its 52-week low of $34.52.

On March 23, 2018, GlaxoSmithKline stock closed at $37.42, and in the week ended March 29, 2018, its stock reached $37.07, a ~4% rise.

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Reason for the rise

On March 27, 2018, GlaxoSmithKline entered into an agreement with Novartis (NVS) for the buyout of Novartis’s 36.5% stake in GlaxoSmithKline’s Consumer Healthcare joint venture for $13 billion.

In 2014, GlaxoSmithKline and Novartis formed a Consumer Healthcare joint venture that was approved by shareholders in the same year. In 2017, GlaxoSmithKline’s Consumer Healthcare business generated revenue of 7.8 billion Great British pounds. The agreement will grant GlaxoSmithKline complete ownership of the Consumer Healthcare business.

On March 23, 2018, the European Medicines Agency’s Committee for Medicinal Products for Human Use (or CHMP) recommended a positive opinion on the approval of the marketing authorization application of ViiV Healthcare and Janssen Sciences’ Juluca, a two-drug regimen for the treatment of individuals with HIV who are virologically suppressed on a stable antiretroviral regimen for at least six months.

Notably, in 2017, GlaxoSmithKline reported revenue of $38.9 billion, which reflected a ~3.3% rise on a year-over-year basis. In 2017, GlaxoSmithKline reported earnings per share of $2.91 compared to $2.66 in 2016.

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Analysts’ recommendations

Of the five analysts tracking GlaxoSmithKline in April 2018, one has recommended a “strong buy,” while four have recommended “holds.” On April 2, GlaxoSmithKline had a consensus 12-month target price of $40.43, which represents a ~3.5% ROI (return on investment) over the next 12 months.

Peers’ ratings

Of the six analysts tracking AstraZeneca (AZN) in April 2018, three have recommended “strong buys,” while one has recommended a “buy.” Two analysts have recommended “holds.” On April 2, AstraZeneca had a consensus 12-month target price of $39.09, which represents an ~11.8% ROI over the next 12 months.

Of the 23 analysts tracking Mylan (MYL) in April 2018, ~65% have recommended some form of a “buy” rating. On April 2, Mylan had a consensus 12-month target price of $49.9, which represents a ~21.2% ROI over the next 12 months.

Note: An earlier version of this article did not specify that Juluca is a product of both ViiV Healthcare and Janssen Sciences. The two-drug regimen comprises dolutegravir 50 mg (ViiV Healthcare) and rilpivirine 25 mg (Janssen Sciences).

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