Interactive Investor

ii view: Glaxo shares spike higher after full-year upgrade

Sales growth is broad, with the Consumer business to be separated in mid-2022. We assess prospects. 

27th October 2021 15:46

Keith Bowman from interactive investor

Sales growth is broad, with the Consumer business to be separated in mid-2022. We assess prospects. 

Third-quarter results to 30 September

  • Currency adjusted revenue up 10% to £9.1 billion
  • Adjusted operating profit up 8% to £2.87 billion
  • Adjusted earnings per share (EPS) up 3% to 36.6p per share
  • Dividend payment flat at 19p per share


  • Now expects full-year adjusted EPS to decline between -2% to -4%, from a previous mid-to-high single digit decline
  • Continue to expect a dividend total of 80p per share for 2021

Chief executive Emma Walmsley said:

"GSK has delivered another quarter of strong business performance, with double-digit sales growth in Pharmaceuticals and Vaccines, increased momentum in Consumer Healthcare, and continued discipline on costs. This has allowed us to improve our full-year guidance and, alongside the progress in strengthening our R&D pipeline, reinforces our confidence in the outlook for a step-change in growth and performance in 2022 and beyond. We also continue to make excellent progress towards unlocking the value of Consumer Healthcare through a successful demerger in mid-2022."

ii round-up:

Pharmaceutical and consumer healthcare company GlaxoSmithKline (LSE:GSK) today raised its full-year earnings estimates as both cost savings and sales momentum across the company aided its latest quarterly performance.  

Increased sales of its shingles vaccine Shingrix and growth in sales of new specialty products contributed to a 3% improvement in adjusted earnings per share to 36.6p per share, beating analyst estimates. 

GSK shares rose by as much as 4% in UK afternoon trading following the midday announcement, leaving them up around 10% year-to-date. However, the shares had given up most of those gains by late afternoon. The FTSE 100 is up just over 12% this year and by nearly 25% for UK rival and Covid-19 vaccine developer and maker AstraZeneca (LSE:AZN).   

Sales growth for GSK’s own vaccine business led the way during the quarter, rising 13% to £2.17 billion and accounting for just under a quarter of total group turnover. Pharma sales, accounting for almost half of total sales, improved 10% on a currency adjusted basis to £4.39 billion. 

Lastly, sales for its Consumer Healthcare division, which is scheduled to be separated in mid-2022 and whose products include Sensodyne toothpaste and Panadol pain relief, rose an adjusted 8%to £2.51 billion. 

GSK management now expects full-year adjusted earnings per share to decline by between -2% to -4% on a currency adjusted basis. That’s better than its previous estimate for a mid-to-high single digit decline.

ii view:

GlaxoSmithKline is a UK headquartered global pharmaceutical company. Key drug areas include products for HIV, respiratory conditions, oncology or cancer and immuno-inflammation. Following investor pressure for a potential value enhancing separation of its pharma and vaccine businesses from its Consumer Healthcare division, a separation is now planned for mid-2022. 

For investors, a separation of its Consumer Healthcare division reduces business diversification, adding pressure on its pharma business to deliver new profitable drugs over the longer term. Its HIV business is facing competition from rival Gilead Sciences (NASDAQ:GILD), while a forecast price/earnings (PE) ratio above the three-year average suggests the shares are not obviously cheap. 

That said, a Consumer Healthcare separation should add increased management focus to each. It could also make each a more digestible takeover target. A forecast dividend yield in the region of 4% also remains attractive in the current low interest rate environment. In all, and with significant change pending in 2022, the shares look to remain worthy of continued support. 


  • R&D pipeline comprises 63 vaccines and specialty medicines
  • Defensive qualities. Consumers need medicines even in a recession


  • Consumer sales are down 7% year-to-date
  • Currency movements can hinder

The average rating of stock market analysts:

Strong hold

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