UK-based pharmaceutical giant, GSK, has revised its annual profit and sales estimates upwards for the second time this year, driven by robust Q3 sales of its recently launched RSV vaccine, Arexvy. The vaccine brought in £709 million ($962 million) in the US, significantly surpassing analysts' expectations of £358 million ($485 million), leading to a 3% increase in GSK's shares.
The company is banking on Arexvy to drive future growth amid concerns over its drug pipeline and costly US litigation over Zantac, a discontinued heartburn medication. Arexvy is expected to become GSK's next blockbuster medicine as it faces imminent patent expiries and decreasing revenues from current top-sellers by the end of this decade.
Full-year sales for the vaccine are projected between £900 million and £1 billion ($1.22 billion), with CVS, America's largest pharmacy chain, exclusively carrying Arexvy. This gives GSK a competitive edge over Pfizer (NYSE:PFE)'s RSV shot Abrysvo.
The company now expects annual adjusted earnings per share to rise between 17% and 20%, excluding currency fluctuations, up from its previous forecast of 14%-17%. Sales are forecasted to grow by 12% to 13% in 2023, an increase from earlier projections of 8%-10%.
Despite these positive developments, GSK faces nearly 79,000 cases of Zantac litigation in the US, with trials set to begin in January 2024. Meanwhile, Shingrix, GSK's flagship shingles treatment, posted Q3 sales of £825 million ($1.12 billion), slightly under market estimates.
CEO Emma Walmsley affirmed that the company's long-term prospects continue to strengthen due to progress in their vaccines pipeline.
InvestingPro Insights
GSK, with a robust market cap of $70.8 billion, is a significant player in the pharmaceutical industry. The company's stock is known for its low price volatility, providing a sense of security for investors. According to InvestingPro Tips, GSK yields a high return on invested capital and operates with an impressive return on assets, 21.33% over the last twelve months as of Q2 2023.
InvestingPro data also reveals that GSK has a P/E ratio of 3.8 and an adjusted P/E ratio of 10.61 as of Q2 2023, indicating that the company's shares may be undervalued. This is further supported by the InvestingPro Fair Value of $52.44, suggesting that the stock has potential for growth.
Moreover, GSK has maintained its dividend payments for 23 consecutive years, with a dividend yield of 3.76% as of 2023. This consistent return on investment makes it an attractive option for income-focused investors.
Finally, it's worth noting that three analysts have revised their earnings upwards for GSK for the upcoming period, reflecting market confidence in the company's future performance. For more detailed insights and tips, consider exploring the InvestingPro platform, which offers a comprehensive analysis of over 10 additional metrics for GSK.
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