A Look at GSK’s Spending and Earnings in Fiscal 2019

EPS trends

In the first-quarter earnings investor presentation, GlaxoSmithKline (GSK) reaffirmed adjusted EPS guidance of a YoY decline of 5%–9% in fiscal 2019. The company reported non-GAAP EPS of $0.78, 13.48% higher on a YoY basis and more than the consensus estimate by $0.14.

Analysts expect GlaxoSmithKline’s non-GAAP EPS to change YoY by -7.22% to $2.88 in fiscal 2019, 3.59% to $2.98 in fiscal 2020, and 13.63% to $3.39 in fiscal 2021. Analysts also expect the company’s non-GAAP EPS to change YoY by -21.52% to $0.62 in the second quarter, -14.13% to $0.79 in the third quarter, and -28.48% to $0.58 in the fourth quarter of fiscal 2019. While these forecasts are in dollar terms, GlaxoSmithKline’s presentation currency is pounds sterling.

Dividend trends

GlaxoSmithKline’s TTM trailing 12-month dividend yield is 5.18%. In the first-quarter earnings investor presentation, the company has guided for 80 pence per share of dividends for fiscal 2019.

Operating cost trends

In the first-quarter earnings investor presentation, GlaxoSmithKline has guided for an increased cost base due to the acquisition of Tesaro as well as an accelerated increase in R&D (research and development) spending associated with investments in priority assets in fiscal 2019. Subsequently, the company expects lower cash generation in fiscal 2019 as compared to the previous year. According to the first-quarter earnings call, GlaxoSmithKline is deploying technologies such as human genomics, functional genomics, machine learning, and artificial intelligence to improve overall R&D productivity.

According to the first-quarter earnings call, GlaxoSmithKline is focused on generating data to advance its investigational oncology therapies such as Zejula in first-line ovarian cancer, dostarlimab in endometrial cancer, and its BCMA ADC (antibody-drug conjugate) belantamab mafodotin in multiple myeloma.

Royalties and other expense trends

In the first-quarter earnings investor presentation, GlaxoSmithKline has guided for fiscal 2019 royalties similar to those reported in fiscal 2018. The company has guided for net finance expenses of 900 million–950 million pounds and an effective tax rate of 19% for fiscal 2019.