GlaxoSmithKline Considers Consumer Business Spin-Off, Stock Up

GSK stock rose on Friday

On Friday, July 20, GlaxoSmithKline (GSK) stock rose ~2.9% to close at $41.87. The stock was trending upward on the news by the Financial Times that the board is considering splitting the company. The report also announced that the chairman is discussing spinning off the consumer division on continued pressure from investors.

GlaxoSmithKline Considers Consumer Business Spin-Off, Stock Up

As per the Financial Times report, GlaxoSmithKline chairman Philip Hampton is discussing establishing a standalone pharma and vaccine company over the next two to three years. Investors believe the company’s pharma and consumer businesses have limited synergies. On June 1, GlaxoSmithKline completed the buyout of Novartis’s stake in their consumer healthcare joint venture and took full ownership of the business for $13 billion.

Also on Friday, GlaxoSmithKline received FDA approval for its malaria relapse drug Krintafel (tafenoquine). The drug is the first new treatment approved for plasmodium vivax malaria in over 60 years.

GlaxoSmithKline is slated to announce its Q2 2018 earnings results on July 25. Wall Street expects the company to report sales of $9.7 billion, representing year-over-year growth of ~3.5%.

Analysts’ recommendations for GSK stock

As of July 23, GSK stock has a consensus analyst target price of $42.13, which implies a return potential of ~2.5% over the next 12 months. As per a recent Reuters survey comprising five analysts covering GSK stock, only one analyst has a “strong buy” rating on the stock while the rest have “hold” ratings.

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