The latest results from pharmaceutical firm GSK (GSK) have yielded yet another increase in full-year guidance after third-quarter sales and earnings beat market forecasts.

The shares responded positively, rising 1.4% to £14.78, taking the year’s gain to 2% compared with a 7% loss for the FTSE 100 index.

Chief executive Emma Walmsley commented: ‘GSK is delivering strong and sustained performance momentum, with another quarter of double-digit sales and earnings growth.

‘Competitive performance was broadly based but benefited particularly from the outstanding US launch of Arexvy, the world's first RSV (respiratory syncytial virus) vaccine.’

EARNINGS BEAT

Sales excluding Covid treatments for the three months to 30 September grew 10% to £8.15 billion, beating consensus estimates by 5%, while adjusted EPS (earnings per share) jumped 17% to 50.4p compared with analysts’ expectations of 46p.

A large part of the outperformance came from the Vaccines business, which saw revenues grow by 33% to £3.2 billion driven by the launch of Arexvy, which generated sales of £709 million, almost double analysts’ forecasts.

The company said so far in 2023, 1.4 million US adults have been vaccinated for RSV out of more than 83 million at risk.

Sales of Specialty medicines excluding Covid grew 17% to £2.6 billion, driven by broad growth across HIV, Respiratory/ Immunology and Cancer franchises.

GUIDANCE RAISED

The company increased its expected full-year sales growth to 12% to 13% from 8% to 10% previously and lifted its adjusted EPS growth target to 17% to 20% from 14% to 17% previously.

In addition, Walmsley said GSK's longer-term outlook ‘also continues to strengthen, with progress in our vaccines pipeline, the development of our ultra long-acting HIV portfolio and significant new prospects in respiratory.’

EXPERT VIEWS

Shore Capital healthcare analyst Sean Conroy said he would review his estimates following the results call but provisionally he expected ‘to edge up our FY23 forecasts by c.3-4% given we now sit below the new guidance range’.

‘Whilst some questions might remain around GSK’s ability to deliver long-term growth, we believe the long-term outlook has incrementally improved since the start of the year and GSK can deliver on its target for more than £33bn in FY31.’

AJ Bell investment director Russ Mould took a less rosy view: ‘GSK has been left in the shadows of its counterpart AstraZeneca both during Covid, when despite its greater vaccine expertise GSK did not have a jab of its own, and in the intervening period. GSK shares are roughly where they were five years ago, whereas AstraZeneca has advanced 80% over the same period.

‘It will hope today’s positive update can represent a step towards restoring its fortunes and getting more credit from a sceptical market.’

Disclaimer: Financial services company AJ Bell referenced in the article owns Shares magazine. The author of the article (Martin Gamble) and the editor of the article (Ian Conway) own shares in AJ Bell.

LEARN MORE ABOUT GSK

 

---