GlaxoSmithKline
£12.80½
Questor says BUY
The company has been suffering from patent expiries on some of its major products – but is refocusing its business away from "white pills/Western markets" to a more consumer-orientated and emerging market focused group.
The headline numbers suffered from generic competition to herpes treatment Valtrex in the US and the withdrawal of diabetes treatment Avandia from some markets.
Last year's figures were also boosted by one-off sales of influenza pandemic vaccines.
This meant third-quarter pre-tax profits were lower than last year – at £1.97bn, compared with £2.07bn, on revenues that rose 0.8pc to £6.8bn. These numbers were ahead of expectations.
However, when the effect of Valtrex, Avandia and flu are stripped out, revenue growth was about 6pc. This is significant, as it represents the core of the company's business in the future.
GSK remains a dividend play, with the shares yielding 4.7pc. The group raised its interim payment to 16p from 15p last year – it will be paid on January 6 next year and the shares trade ex-dividend for this payment on October 27.
The shares were recommended as a dividend play on October 29 last year at £12.51 and they are now 2pc higher than that level compared with a market up 12pc. Trading on a December 2010 earnings multiple of 11.6 times, falling to 10.4 next year, the shares are a solid yield play with growth potential
http://www.telegraph.co.uk/finance/markets/questor/8082032/Questor-share-tip-GlaxoSmithKline-has-potential-for-growth.html
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