27 July 2022
If you are covering GSK’s results, please see the following comment from Sheena Berry, equity research analyst at Quilter Cheviot:
“GSK posted solid Q2 results this morning, ahead of expectations with sales up 10% higher than anticipated and EPS by 18%. Excluding Covid solutions, sales were ahead of expectations by 3% and these results highlight good underlying momentum. Shingrix, a vaccine for Shingles, has been a key driver of vaccines growth for the group and an important asset, delivering strong performance in Q2.
“On the back of GSK’s solid performance, 2022 guidance has been increased, with sales growth of 6-8% expected – up from 5-7% - and operating profit growth of +13-15% - up from 12-14%. We can expect to see R&D spend ramped up in H2.
“GSK reported positive Phase III data with its RSV (respiratory syncytial virus) vaccine in older adults earlier this year. With a regulatory filing expected in H2, this could be a meaningful revenue contributor for the group.
“More generally, the lack of balance sheet flexibility had been a concern - particularly when the pipeline needs strengthening - but the Haleon spin-off has helped to enhance GSK’s firepower given the £7bn special dividend it received. As a result, we expect GSK to undertake additional deals with the group planning to focus on bolt-ons rather than transformative M&A.
“GSK’s operating profit will be impacted by some patent expirations in 2028, including dolutegravir, an integrase inhibitor in many of its HIV products. The business could face pressure from generic entrants, and internal R&D and external business development will be required to help fill the gap.”
