(GSK.L) GlaxoSmithKline PLC Buy/Sell

Thanks for that pond1. I think I will be hanging on to this one (ie. GSK) for quite some time.

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Gunnergadin,

It could be GSK or Baxters, but GSK's vaccine is more likely to be preferred due to the advice given by the DHS below, Dated 15th October 2009.

Pandemrix (manufactured by GSK)
For all children aged from 6 months of age to less than 10 years of age,:
• Two half doses (0.25ml each) of Pandemrix should be given with a minimum of three weeks between doses.

Celvapan (manufactured by Baxter)
For children from 6 months of age and adults
• Two doses (0.5ml each) of Celvapan should be given with a minimum of three weeks between doses..

JCVI confirmed its earlier advice that Pandemrix should be the vaccine of choice for children and young people up to 18 years of age. This is because currently there are no paediatric data available for Celvapan.

Dated 15th October.

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I do hold shares in Fulcrum, I have no idea who the bidder is but have seen reported that is a UK pharma; I thoguth perhaps investors here might know?

Dear oh dear, not everyone is a ramper.

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possibly the motivation is that the original poster holds shares in fulcrum and would love for people holding shares in astra and glaxo to invest in fulcrum and push the price up?!

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Which company is providing the vaccine on this one? Any ideas?

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a similar post was put on azn bb as well - not sure of motivation for original post

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Cityunslicker,

My humble apologise, I have now found it.
Can't see why they would need Fulcrum, as it appears to be a company whose main expertise, is to advise drug companies in all development area.
I can't see why they would want Fulcrum, as I feel GSK have sufficient staff and expertize of their own.

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Cityunslicker,

Where did you find the info, as the only takeover bid news (old) I can find regarding Fulcrum, is for Fulcrum Technologies, which is a different company to Fulcrum Plc (pharma).
Not saying your wrong, I'm just confused.

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is it GSK bidding for this tiddler, great acquistion if they manage it

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I'm in total agreement it's just that they aren't undervalued compared to their sector peers. The fact that the entire sector is undervalued just means it's a great investment opportunity like the non life insurers

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oxonoxon
Do the calculation.
I suppose you mean, pfizer; merck; sanofi avensis!
& even then when you compare to miners and technology you see GSK are even more undervalued !

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From November's 'Company Refs', when price was 1250p:-
a/ Prospective PE ratio of 10.3 (based on sixteen broker forecasts, five recommending 'buy', one recommending 'overweight', five recommending 'Hold', three recommending 'underweight', and two recommending 'sell').
b/ Forecast growth in eps of 2.87%.
c/ Positive cash flow per share of 130p.
d/ Net cash per share of 90p.
e/ Dividend yield of 5.18%.
f/ Price to sales ratio of 2.67.
g/ Turnover up from £19986m to £24352m in five years.
h/ Seven directors buying recently.

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I think the imortant bit of your post is the "compared with other innovation and R&D based companies" however you left out the important phrase which was that the comparison should be with "similarly sized" co's. As demonstarted in my last post on that basis and compared to AZN they are not underpriced. I am however long the entire sector and agree with your view that these companies are undervalued

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oxonoxon
I'd say undervalued on the basis of actual and projected performance and also on the basis of comparison with other innovation and R&D based companies.
some projections from start of 2009 for GSK
Compare with actual performance and I'd suggest they are likely to outperform.

eps 2009 115.6 div 0.6046
eps 2010 121.9 div 0.6554

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Lingua - on an PE ratio of just over 14 and a dividend yield of 4.5% why do you think GSK's valuation is incoherent? Seems about right to me (I am a holder of GSK)
AZN for example is on a PE sub 10 and a dividend of over 5% (now I look at that I must go and buy some)

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SE8

Baa!
My main point is "how come so many highly paid people aren't doing the job they are supposed to do" and rather are devoting so much effort in displacement activities that serve to disrupt proper conduct and cause instability and are hugely wasteful of resources.

I see the apparently incoherent valuation of GSK by professional investors as a symptom of that wider malaise.

As for attaching engineering to financial...
engineering is supposed to be about making things work not causing things to get so out of control they break down!

I quite agree stress testing individual systems is a good idea and presumably in the FSA's flooding exercise they were looking at interactions and the effect on the whole financial system rather than carrying out a regulation exercise but I can't imagine what they can possibly get out of such an exercise when the individual organisations aren't working properly and are in such a state of flux wrt to all their resources.

Going through the motions in other words!

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My analysis:

being a sheep is safer - if you´re going to be wrong better to be wrong in company!

Enough people in the city are cowed by conventional wisdom in their organisation and there is no promotion in challenging it. Treasury Select reports into the banking crisis make sobering reading.

Was talking to a fund manager the other day who basically described the system as untrustworthy - but he still´s in there fighting to change it - just not very successfully.

The numerology of charting is easier to put into pure mathematics rather than the messy business of human beings. That´s how things like "sub-prime" or self cert mortgages can come to be seen as good ideas.

It also delivers trading ideas much more rapidly - more important individually than the stock market´s other function of capital allocation.

Lingua, Running exercises for what happens in the event of disruption isn´t a bad idea. Better to know what can go wrong when it doesn´t matter than trying to come up with a plan on the spot. Can´t simply "assume" people are going to react according to one´s view of what is rational behaviour for them.

I´m happier knowing that the FSA is doing things like that. It can´t simply be left to government -
http://www.londonprepared.gov.uk/

Unfortunately all the brains in the city (as a herd rather than individually) rather demonstrate Orwell´s phrase:

something to the effect of " only so smart could could believe something so stupid"

BUT we are at risk of conflating the market with the companies listed on it. That´s why I´m focussed on companies that do real things rather than simply financial engineering.

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"They are, with a few exceptions, like sheep waiting for one to start a move. Nervous as hell."

Well they are not doing their job then!
They aren't highly paid just to be copy cats but to properly evaluate financial risk/reward and by investing, rewarding performance in companies that provide great products/services and a decent return to their investors.

I don't see enough of that when results come out. Why aren't they assessing company performance and prospects rather than mouldering in their towers plotting financial voodoo and crayoning in pretty charts or automating what ought not to be automated. Indeed why aren't their managers doing their job and pointing their pups in the right direction. This isn't a matter of regulation and pretending to be seen to be doing something!

I read the other day, albeit in a free rag, that the FSA ran a real time simulation exercise the other day with banks in Canary Wharf requiring them to mobilise for major flood disruption! Can you imagine the opportunity costs of that!

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I think the first part of your post, 'It is hard to believe that UK institutional investors have lost so much confidence' is very relevant. If you look at the lists of fund managers, there are a few that made money over the last 12 months, but far more lost. This is I think why they have so much sitting on deposit in cash. They are, with a few exceptions, like sheep waiting for one to start a move. Nervous as hell.

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Indeed Pond,
Seems like opportunity costs is an old fashioned concept if there is so much money nestling in presumably low interest earning cash accounts.

It is hard to believe that UK institutional investors have lost so much confidence in their ability to evaluate medium term risk and reward that they have passed up investment in a UK owned company that is leading the world in development of products and methods for tackling human ailments, a market which is continually renewing and growing and is little diminished by the economic restraint we've experienced...people always find the money for the medicines they need!

My cynical view is that they are fixated by the dissonance created due to the huge drops in value of the commodity companies and the banks and dreaming of a return to bubble valuations.
Waiting? They are waiting for Godot!

I see those sectors as speculative in and out opportunities rather than the long term value GSK is delivering. There's still all to play for on GSK.
I.M.H.O.

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