Despite consumers stockpiling medicines before lockdown, the pharmaceuticals giant has not been free from damage
GSK revenues fall as Covid causes disruption to sales in Europe despite stockpiling of medicines
- Revenues fell by 2% to £7.6bn and this time coronavirus caused a disruption to sales as Europe and other parts of the world went into lockdown, preventing patients from visiting doctors and being prescribed medicines
- The sales and earnings figures were shy of market expectations reversing the gains the shares had prior to publication
- Recommendation: Big pharmaceuticals such as GSK and AstraZeneca provide an island of calm for dividend hunters so we continue with our Buy recommendation for income investors.
The pharmaceuticals companies have naturally had a strong following in recent months due to the global pandemic and hopes they can find a vaccine or treatment. This morning we already had news that GlaxoSmithKline was in partnership with Sanofi and signing a deal with the UK government to supply 60 million doses of a candidate vaccine. Now the group has just released its second quarter results and these have not been as encouraging as the first quarter results which were boosted by stockpiling of medicines.
Nonetheless, we see the overall results as being resilient; the EPS jumped from the same period last year which was affected by asset disposals and revenues for the half year period rose by 8% as a whole. In this dividend-starved investment world, income seeking investors will be reassured by the 19p dividend declared for the second quarter while management still expect to return 80p in dividends for the full year and still expect to deliver their previous earnings guidance. As well as the group being critical in the development of a vaccines/treatment for this pandemic, there has been an upbeat tone about its various other drugs in the R&D pipeline. Meanwhile we have seen a continuation of strong sales for its newer drugs.
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