- Fall in third quarter vaccine sales
- Full year profit reiterated
- Q3 dividend of 15p per share
Disappointing vaccine sales took the shine off GSK’s (GSK) third quarter update and despite management reiterating full-year sales and profit guidance, the shares sank to the bottom of the FTSE, falling 3.6% to £13.99.
The shares languish near one-year lows and sit just 14% above the five-year low, which means they are down by around a fifth since 2019, underperforming the blue-chip FTSE positive return of 12% over the same time frame.
WHAT DID THE COMPANY SAY?
CEO Emma Walmsley commented: ‘We have delivered another quarter of sales and core operating profit growth, and further good progress in R&D.
‘Strong growth in specialty medicines helped to offset lower vaccine sales and reflected successful new product launches in oncology and HIV, as well as the resilience we have now built into GSK's portfolio and performance.
‘We are on track to deliver our 2024 guidance, and we are even more confident in our 2026 and 2031 outlooks.’
Revenue is expected to grow between 7% and 9% while core operating profit is anticipated to increase by between 11% and 13% with core EPS (earnings per share) growing 10% to 12%.
Sales for the three months to 30 September increased 2% to $8 billion while core operating profit increased 5% to $2.76 billion, beating consensus expectations.
CHALLENGING VACCINES
Vaccines declined by 15% in constant currencies impacted by lower sales of RSV (respiratory syncytial virus) vaccine Arexvy and shingles vaccine Shingrix. GSK lowered guidance and now expects a low single-digit decrease in vaccine sales compared with a low-to-mid single digit increase previously.
Analyst Sean Conroy at Shore Capital said: ‘Given these are key growth drivers for GSK, we expect the results call will likely centre on whether momentum for these is still expected to pick up next year and GSK’s conviction around expanding Arexvy into a younger, at-risk populations and expected timing for revaccination.’
Despite these challenges Conroy believes GSK offers a decent period of near-term growth with a realistic prospect of delivering on its longer-term ambitions, which combined look ‘wholly unbecoming of a single-digit earnings multiple.’
