GSK (GSK) shares edged up 1.76% as the company reported a robust start to 2024, with first-quarter earnings revealing a mixed performance against analyst expectations but an improved profit outlook for the year. The pharmaceutical giant posted an adjusted EPS of GBP0.43, which fell short of the consensus estimate of GBP0.91. However, revenue reached GBP7.4 billion, a 10% increase compared to the same quarter last year but below the anticipated GBP8.85 billion.
The company's growth was driven by a broad-based performance across its product portfolio, with notable increases in Vaccines sales by 16%, Specialty Medicines by 17%, and a 33% surge in Trelegy sales. Excluding COVID-19 solutions, the sales growth was even more pronounced, at 13% for total sales and 22% for Vaccines. Despite the revenue miss, the market responded positively to GSK's announcement that it expects 2024 turnover growth towards the upper part of its 5% to 7% range and has raised its Core operating profit growth forecast to 9% to 11%, up from the previously projected 7% to 10%.
Emma Walmsley, Chief Executive Officer of GSK, commented on the quarter's performance, "We have made a strong start to 2024, with another quarter of excellent performance and continued pipeline progress, including positive data readouts for 4 phase III medicines." She added, "We expect this strong momentum to continue, and look forward to delivering another year of meaningful growth in sales and earnings in 2024."
Looking ahead, GSK has updated its guidance for the full year 2024, now anticipating Core EPS growth of 8% to 10%, an increase from the previous range of 6% to 9%. The company also declared a dividend of 15p for the first quarter of 2024, with a full-year expectation of 60p per share. This guidance excludes any contributions from COVID-19 solutions, as GSK does not anticipate further pandemic-related sales or operating profit for the year.
The company's pipeline and targeted business development activities, including positive phase III outcomes and regulatory submission acceptances, are poised to support future growth. GSK's dividend policy remains unchanged, reflecting the strong business performance during the quarter.
Investors will be watching closely as GSK navigates the rest of the year, aiming to capitalize on its strong start and updated guidance to deliver on its promises of growth in sales and earnings.
Reacting to the report, analysts at Bank of America maintained an Underperform rating and 1,700p price target on GSK, stating it was a "strong quarter with [the] 16% EPS beat helped by non-recurring benefits." The firm also said the guidance was raised in-line with consensus expectations.
Meanwhile, analysts at Jefferies maintained a Buy rating and 1,950p price target on GSK shares following the trading update. The firm said GSK's first quarter sales were "4% ahead, with Specialty just 1% above including an Ojjaara beat, Vaccines 5% beat as Shingrix better but Arexvy shy, and Gen Med
7% beat on Trelegy plus legacy drugs."
"Stronger top-line and better gross margin, further boosted by a reversed legal provision in SG&A, drive 14% Adj EBIT beat and Adj EPS 16% ahead," added the firm. "Outlook now at upper-end for Sales, similar to cons, but profit aims upgraded suggesting potential +1%-2% cons upgrades."