"Dividend growth at Glaxo has ground to a halt in recent years. It has struggled to develop new lucrative products to counter the effect of its existing drug patents coming to an end and, as a result, has found it difficult to grow its profits and to generate enough cash to pay its dividend. This has weighed heavily on the share price - Glaxo shares changed hands for more than £17 last summer compared with just over £13.50 at the time of writing.
Profit growth looks as if it will remain hard to come by over the next couple of years as Advair, the company's top-selling respiratory drug, is now off-patent and faces a growing threat from cheap generic competition. Competitive threats to its HIV drugs also worry some analysts. The pressure is on new chief executive Emma Walmsley to turn things around and get more out of its research and development spending. Cost-cutting may free up some cash to maintain the dividend per share (DPS) at 80p in 2018 (giving a yield of 5.7%), but the future of the payout is less certain from 2019. Optimists point to the profits that could come from a shingles vaccine and the possibility that treatments for blood cancer could turn out well. But overall, Glaxo has to do more to reassure shareholders that their dividend payments are safe."
Per the HL website, in January 3 brokers are saying buy and 2 hold, whereas in December it was 2 hold and 1 underweight, so they have just turned a bit more bullish. In my book, not so good, the more bearish the better in my view. However, we are a long
way off everyone being bullish so not to worry.
I like to look at brokers views (as well as the amount the stock is being shorted). Big however. Having bought into GSK and showing a healthy profit - thus the brokers seem to be correct. With respect to IMB, which I am looking to buy, the broker are mostly promoting as a Buy but the share price continues to slide. So very mixed results.
Assuming outsiders are smarter than the people you've already got and hiring and firing accordingly has a very obvious flaw in that you are biased because you know the failings of your existing employees whereas you are only presented with a positive image of potential new recruits (take a look at the puffed up cvs on linkedin for anyone you know)
The cull sounds ridiculously excessive and might well be an exercise in corporate power politics.
As a shareholder- worrying .
It is an interesting link, but the qualitative statement below tells you "nothing" about the valuation of the company, it's financial status, it's portfolio patent risk, it's competitive threats. Rather a useless statement really -- like many trotted out by these articles :-
As one of the largest pharmaceutical companies, GlaxoSmithKline has used its vast resources to create the next generation of healthcare treatments. The company's innovative new product line-up and expansive list of patent-protected drugs create a wide economic moat, in equity analysts opinion.
The magnitude of the company's reach is evidenced by a product portfolio that spans several therapeutic classes, as well as vaccines and consumer goods. The diverse platform insulates the company from problems with any single product."
Hi - for those who haven't seen the broker forecast in 'News' :
'Deutsche Bank today reaffirms its hold investment rating on GlaxoSmithKline PLC (LON:GSK) and raised its price target to 1440p (from 1380p).'
"LONDON (Alliance News) - GlaxoSmithKline PLC's new boss Emma Walmsley has replaced 50 of the 125 top managers at the pharmaceutical giant in a move to shift the company's focus back towards making blockbuster drugs, the Daily Mail newspaper reported yesterday.
According to the newspaper, citing a source, Walmsley is seeking to bring in talent and ideas from world-leading firms to boost sales, development technologies and utilise new ways of using reams of clinical data.
High profile hires from outside include former Walmart Stores Inc Chief Information Officer Karenann Terrell, Google digital chief Marc Speichert, Unilever PLC executive Tamara Rogers and Novartis AG finance chief Tobias Hestler. Glaxo also has poached its Global Pharmaceuticals President Luke Miels from rival Astrazeneca PLC and appointed Tony Mills, from Pfizer Inc, as head of platform technology and science.
Walmsley has promoted internally, as well, with Kate Knobil going from chief medical officer of pharmaceuticals to chief of the entire group, the Daily Mail reported.
I do not know. I am looking at the FTSE / DJ being at their highest ever, and sort of remember summer 2008. I then look at my tiny portfolio and am thinking what's going to happen to these shares when 2008 repeats all over again ?
Almost forgot about the exchange rate effect with the appreciating £. The rest still holds good, however. I did add, in the end today, at 1370, but missed the low point the other week - but not many get it dead right.
Took some profits in RDSB today, not because I'm worried about them, but because I was way over-invested in them %-wise, and you never know what's around the corner - Macondo and all that jazz.
Added to my holding in LLOY, which should be yielding similarly to RDSB this coming year, and I was under-invested in them.
Looks as if I'm more or less in line with your "Ten stocks" list, Bill. Let's hope that we can crack a bottle of bubbly at year end. Actually, I'm only invested in ITV, MKS, GSK, and LLOY in your list.
GlaxoSmithKline executive issues warning as Liberal Democrats say cost of medicine imports has already jumped by £5m
Up to £70m will have to be diverted from developing new cancer drugs in order to prepare for the impact of Brexit, Britains biggest maker pharmaceuticals of has warned.
In a stark intervention over the extra costs being incurred, Phil Thomson, president of global affairs at GlaxoSmithKline (GSK), made clear that something approaching the figure would have to be spent whatever the outcome of trade talks.
In evidence to the Commons health select committee, he said he would rather be spending the money on the companys efforts to find new, life-saving cancer treatments.
He said the company estimated that 1,700 of its products would be directly affected by a chaotic Brexit, with new regulation processes, labs and approval systems costing somewhere between £60m and £70m.
Even if we have a smooth and orderly Brexit process, and we work through with a new [free trade agreement] or a new arrangement, there are going to be costs of that magnitude anyway, but they will probably be more phased, Thomson told the committee.
We will probably be able to reallocate some of those costs elsewhere. It may not be as significant as the contingency plan, but the reality is that we are already going to have to spend some of that.
All I would say to you is that we are going to do everything we can to minimise disruption.
Obviously, that money could though, be being put behind clinical trials, and I can tell you right now that we have a cancer portfolio we are trying to invest in, into which that money should be going, to develop the next generation of cancer medicines.
Phil Thomson, president of global affairs at GlaxoSmithKline says
That is something I will be honest with you that we are wrestling with internally inside GSK.
He added that under some scenarios, products that have been approved in the UK would need to be re-authorised for Europe. Of the products affected, the impact of the testing changes and the reregistration is about 13,000 packs that will have to be updated as a result of what we need to do, he said.
Some money was already being spent, he said. The timeline to implement the laboratories, at a minimum, takes 18 months so, we are already having to initiate cost as a result of this.
Sarah Wollaston, the Conservative chair of the health select committee, said it was her personal view that the UK should try to stay inside the European Medicines Agency, to ensure current regulation remained as simple as possible.
The Liberal Democrats said they had uncovered figures suggesting the cost of importing medicines had already jumped by £5m since the Brexit vote. Freedom of information data from 32 NHS trusts found they had spent an extra £1.2m due to the fall in the pound since the referendum the equivalent of an extra £5m across all 135 NHS trusts.
GSK has already announced it is preparing to build new drug testing facilities in Europe as part of contingency plans. The pharmaceutical industry as a whole has been warning about the impact on patients as a result of a chaotic Brexit.
Sheuli Porkess, from the Association of the British Pharmaceutical Industry, said: The way each company is approaching Brexit depends on their own individual circumstances, but weve already seen a number of companies make decisions about their future business.
These decisions are being taken at a cost to replicate important safety and quality assurance processes for medicines in the UK and the EU, and take time to implement.
The sheer scale and complexity of safely ensuring 45m packs of medicine make their way from the UK to Europe each month and over 37m packs coming the other way requires processes to be in place well before March 2019.
"Ah yes, the chart. I'm a very, very basic chartist - W formation, double-top, head and shoulders chap... it's certainly showing signs of a possible recovery in its fortunes. Here's how I see it, and I could be very wrong as I'm merely an old salt."
Lupo - thanks for the "in" to the Barrons piece, and for your own (IMHO better) analysis.
I'm an even more basic chartist, I think... where has it been in the past, both recent and further back, and then consider the question of whether 'tis more likely to recover past highs or test previous lows. Looking at the 5yr picture for GSK, there's a clear cyclical (and unusually symmetrical) £13-£17 range... it tells me that all else equal (it rarely is), we'll most likely see £17 again in due course - but also that another retrace back to £13 beyond that would hardly be shocking. Not an outlook to make anyone rich, but better to enter near £13 than near £17... if you feel you have to get involved at all...
Considering each part of your '5-point prognosis' carefully, I take no real issue with any of your inferences or assumptions. It's already too late for EW to cut the dividend and blame it on her inheritance... debt levels are fine and eminently serviceable, with no immediate threat to (strong) credit ratings. The only reason I can see for cutting - assuming that FCF does continue to improve as projected - is to make a bit more headroom in the balance sheet for "the big deal", but if they do take the plunge there, that's exactly when they'll need to cultivate shareholder loyalty and patience.
The Barrons piece is interesting enough but ultimately suffers from the typical flaw culturally inherent to much US analysis... for all the expertise and industrial wisdom, the valuation conclusion is ultimately predicated on a random and poorly supported target metric. In this case, a +40% projected total return based on 15x P/E by 2020... why not 10x? Why not 8x... or 18x for that matter? It makes all the difference... and then there's the question of which earnings figure is actually appropriate (before Games jumps in, resplendent in his finest Terry Smith cheerleader garb).
But FWIW, however thinly substantiated, I don't think they're a million miles away. And it betrays the current comfort, that you don't actually need much at all by way of SP appreciation to deliver very reasonable total returns, as long as the 6% divi yield is indeed defended, as I think it will be. EW will still want to actually grow the divi before the end of her tenure, but that could be tougher trick to pull off... she might think about curing cancer as an 'encore' (and for once - quite literally!!)
Ah yes, the chart. I'm a very, very basic chartist - W formation, double-top, head and shoulders chap.
Aside from that, it's certainly showing signs of a possible recovery in its fortunes. Here's how I see it, and I could be very wrong as I'm merely an old salt.
1. The Directors will, or da mn well should, do everything in their power to at least hold the dividend.
2. For a company of GSK's size, would reducing the dividend to 75 - 50% really make much difference to their growth ambitions?
3. Investors are looking for recovery stocks, and GSK fits reasonably well there.
4. The chart looks as if it's seen its low point.
5. With an ageing and increasingly wealthy (generally) global population, drugs and stuff has got to be a growth industry, and if EW and co are unable to take advantage of that situation, I'd be very surprised.
Guess whether Lupo's going to add to his holding tomorrow.
That's weird, it's the same as TS's. Tell you what, type in Barrons Glaxo in your browser and click on the link headed, "Glaxo: expect a speedy recovery - Barrons". That'll do it; although I expect most have already.
Noting the surge in the sp today [despite the appreciation in £v$], trawled for news.
Found this on UK Stemvelis drug approval :
Of interest, but don't think it explains this scale of investor buying .
Maybe it's to do with the emerging prospects for the Shringrix vaccine?
Excerpts from article released late on 27th December; certainly noteworthy:
"Pharmaceutical firm GlaxoSmithKline is set for a $1billion (£750million) bonanza as it prepares to launch a breakthrough vaccine for shingles.
In a landmark moment for new boss Emma Walmsley, the company is preparing to take on US rival Merck with its Shingrix shot.
It will also see a renewed push by Glaxo to take a bigger market share in the US.
The new shot, designed to prevent shingles in adults aged 50 and over, is seen as a potential blockbuster, and could reel in as much as £750million annually.
Breakthrough: In a landmark moment for new boss Emma Walmsley, the GlaxoSmithKline is preparing to take on US rival Merck with its Shingrix shot
It has already won approval in the US and is expected to get the nod from European regulators next month, setting the stage for a global face-off with Merck.
Half of people who reach 85 are likely to get shingles, which triggers painful, blistery rashes on the skin.
It is sparked by the same virus that causes chickenpox. Merck launched its own Zostavax shingles vaccine in 2006 and has had the market to itself.
But the American firm could be about to lose the upper hand after GSK's Shingrix was shown to offer better protection.
The committee in charge of US vaccination policy has also endorsed Shingrix over Zostavax, in an early victory for GSK.
GSK has spent the past two years ramping up production of Shingrix at a factory in Wavre, Belgium.
During an exclusive tour of the facility the biggest of its kind in the world chief medical officer Dr Thomas Breuer told the Mail its effectiveness was based on adjuvant, a substance that boosts immune responses.
He said: 'Because people are living longer, there is more demand to develop vaccines for older adults. Shingrix can be given to people who have a weaker immune system.
Shingrix has been shown to have an efficacy rate of 90 per cent in adults aged 50 and above. You see those kind of numbers in children but to see it in older patients is absolutely unprecedented.'"
Happy & prosperous New Year
Other than a little to UK based I would not argue with your selection, But no way will i be rushing out tomorrow to buy equal lots in them all.
Why, I see the market as nearing a high, possibly going a little higher and certainly more volatile during the year
GSK sub 1300 and LLoyds sub 67, possibly 66 pre any dividend announcement are my target buys. Also NG at current price but there is time for that before the next dividend and SLA near 400 if the market is that volatile
As foreshadowed on other relevant boards... 2018 trading from tomorrow, so time to repeat last year's "virtual portfolio" challenge. Same rules, as per the papers - equal weighted, valid for the whole year with no switching, full owning-up at year end!
Marks & Spencer
I retain a bias toward UK exposure and 'Value' (the two closely related, obviously), with an expectation that the UK domestic outlook will clarify satisfactorily (if not wonderfully) this year. But it's no slam-dunk... and so hedged with a decent slug of overseas earnings and a general focus on "stock specific" stories - with LLOY the only real pure play on 'UK PLC' and associated sentiment. Ultimately, well aware that it's near-impossible to avoid losers as well as winners, I have asked the question - can I see 15% over 2018 (plus divis)? Without necessarily much help from the wider market.
Four stocks stay in from 2017, with CPI, IMB, ITV and SGC still to justify their original inclusion and getting another chance (SGC was a close call). Bonmarche has done its job as "speculative" midcap retail play; VOD still looks fine to me but harder to see sufficient upside in either valuation or financial reporting; CARD and WTB were tougher choices, both still good for the long term IMHO but I see their respective attractions now more finely balanced against likely persisting near-term headwinds.
I will doubtless be elaborating on the case for each of the "new" inclusions in the course of the year. FWIW stocks actively considered but failing to make the cut (as well as CARD and WTB): Braemar and SBRY (from my 2017 Top 10), then Aviva, BT, Debenhams, Gattaca, Merlin, Morrisons, Trinity Mirror.
FYI I own 7 of the 10 stocks, with all of CPI (still!), WPP, GSK under active consideration (probably in that order). I'd be surprised if I didn't buy into at least one in the course of 2018.
"""GlaxoSmithKline plc (LSE/NYSE: GSK) today announced that Dr Patrick Vallance, President, R&D, has informed the Board of his intention to leave the company to become the UK Governments Chief Scientific Adviser and Head of the Governments Office for Science. He will be responsible for providing scientific advice to the Prime Minister and advising the Government on aspects of policy on science and technology."""
Yes today's Tempus column . Glaxo , Dixons , Marstons all div play tips to buy .
I added GSK at 1275 p as I had been planning to . The others are bombed out but still exposed to U.K. Consumer so not for me till Brexit gets sorted .
LONDON (Alliance News) - Australian regulators are to take local units of pharmaceutical giants GlaxoSmithKline PLC and Novartis International AG to court over misleading representations in the marketing of pain relief products.
The Australian Competition & Consumer Commission alleges GlaxoSmithKline Healthcare Australia Pty Ltd and Novartis Consumer Health Australasia Pty Ltd had made "false or misleading" representations with regard to their Voltaren Osteo Gel and Voltaren Emulgel products.
The ACCC claims GSK and Novartis had marketed the Osteo Gel product as being specially formulated to treat osteoarthritis conditions and it was more effective than Emulgel to treat those conditions.
The ACCC found Osteo Gel was being sold at a "significant price premium" to Emulgel in supermarkets. The ACCC explained the recommended retail price for a 150 grammes of Osteo Gel was AUD28.99 compared to AUD25.99 for Emulgel.
In some stores, however, the Osteo Gel was selling at AUD7.50 - or 33% - more than the Emulgel equivalent.
The two products, however, are "identically formulated" the ACCC explain. Both products contain the same active ingredient: diclofenac diethylammonium gel 11.6 milligrams per gramme. This active ingredient, the ACCC add, acts in a "non-specific manner to reduce local pain and inflammation wherever it is applied."
"We allege that consumers are likely to have been misled into purchasing Osteo Gel thinking that it is different to Emulgel and more effective for treating osteoarthritis conditions, when this is not the case", ACCC Chairman Rod Sims said.
"In fact," Sims added, "the product has an identical formulation to Emulgel, and both products are equally effective in treating not only osteoarthritis, but also a range of other pain conditions."
"We allege GSK and Novartis engaged in a deliberate commercial strategy to differentiate the products in a way that was likely to mislead consumers," Sims said.
"The alleged conduct is particularly concerning, given the significant penalties handed down by the court against the makers of Nurofen for what we consider to be similar conduct," Sims concluded.
Nurofen-maker Reckitt Benckiser PLC was fined AUD6 million in 2016 after the ACCC pursued the FTSE 100-firm for misleading customers after marketing its identical products for different conditions with different prices."
Now how the he ll did Brussels, with all its regulatory and investigatory machinery, miss that.
Yes thought I'd partially explained my logic, such as it was. I had just exited some US trades and had some cash on hand that I was looking to deploy and saw GSK at 1280 and thought it was worth another go.
Some other thoughts in my mind at the time were:-
1. The recent UBS upgrade, I'm sure that their analysis will have been more thorough than mine !
2. Share price has had some better days, made it to 1341 on tuesday, £ rise knocked it back ?
3. The 6.2% yield.
More recently it has occurred to me that, provided that the dividend is maintained, I can afford this to go to 1200 over the next year without loss. Surely it must have bottomed by then ?.
Still not a conviction buy and I have only committed just over half of the size of the holding that I sold.
lotcangorong - hi
Divi is good - but for how long?
Net debt is high - and rising
Working capital is negative (now 4.3 times what it was a year ago!)
Dividend cover is 0.23!
I bought at 1200 (long time ago) and have been happy with the good dividend that they say will last into 2018, so will continue to hold for a while to see what happens in next 3 months.
What' going to change in 'a couple of years'- a takeover perhaps?
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