Eyes Down For GlaxoSmithKline plc’s Results

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GlaxoSmithKline (LSE:GSK) (NYSE: GSK.US) shares have been on a bit of a slide since last summer, and are now up only around 7% over the past 12 months to 1,567p — barely ahead of the FTSE 100.

So shareholders will be looking for good news on Wednesday 5 February when the pharmaceuticals giant is set to deliver final results for the year to 31 December 2013. What should we expect?

Forecasts

Well, City analysts have been pretty consistent in their forecasts over much of the past year, and there’s a fairly tight consensus of around 113p in earnings per share (EPS). There’s a slightly wider range of guesses for dividends, but they centre on around 77.5p per share.

Realistic? At third-quarter time, Glaxo reported “core” EPS of 82.1p for the first nine months, with core results given exclusive of various amortisation, impairments, restructuring and other costs, and issued guidance for a 3-4% growth in core EPS for the full year. Total EPS was given as 41.4p for the nine months — so we can really only wait and see.

Nice yield, but cover a little low?

The dividend is looking pretty safe, with quarterly dividends totaling 55p per share having been paid already — a simple repeat of the Q3 payment of 19p would take us to a total of 74p, which is pretty close to estimates.

On the current share price, the forecast dividend would yield 4.9%, That’s healthily above the FTSE’s forecast average of 3.1%, and it would be covered about 1.5 times by earnings. That level of cover is consistent with the past couple of years, but for a company with such a large R&D budget, there will be some who would like to see cover beefed up a bit.

Blockbuster

What apart from headline figures should we be looking for? Pipeline is the name of the game for GlaxoSmithKline, so an update on the year’s drug development will make for essential reading. It should be pretty decent — Glaxo has had quite a few trial successes and approvals over the year.

A potential big one will be the world’s first malaria vaccine, and the firm reported “positive 18 month follow-up data” at Q3 time — and expects to file for approval some time in 2014.

Biotech

Acquisition is a key part of GlaxoSmithKline’s strategy, too, as novel biotechnology is increasingly being seen as the eventual successor to today’s blockbuster drugs model, and there has been plenty of such activity over the past year.

All in all, it’s unlikely there will be any great surprises on Wednesday — just more solid “steady as she goes” stuff.

> Alan doesn't own any shares in GlaxoSmithKline. The Motley Fool has recommended shares in GlaxoSmithKline.