Key Takeaways
- GSK delivered Q1 core EPS of 46.5p, surpassing the Street’s 43.5p projection
- Legal settlement provisions contributed approximately 50% of the profit outperformance
- Shingrix vaccine revenue surged 20% to reach £1.0 billion; Arexvy RSV vaccine declined 18%
- Full-year outlook maintained despite increasing headwinds from Sterling strength
- Shares retreated approximately 3% following the earnings release
GSK delivered first-quarter results that exceeded Wall Street projections on Wednesday, yet the pharmaceutical giant’s shares tumbled roughly 3% as traders scrutinized the underlying drivers of the beat.
The company’s core operating profit for the quarter ending March 31 climbed 10% on a constant currency basis to £2.65 billion, significantly outpacing the consensus expectation of £2.46 billion. Core earnings per share reached 46.5 pence, reflecting a 9% year-over-year increase and beating the anticipated 43.5 pence.
However, equity analysts at Jefferies were swift to point out that approximately half of the upside surprise stemmed from legal settlement provisions rather than operational performance. “Core Operating Income and Core EPS both 7% ahead of consensus, but c50% of that driven by legal settlement provisions,” the research firm noted.
Revenue increased 5% at constant exchange rates to £7.6 billion, aligning precisely with analyst expectations. While respectable, this top-line performance alone wasn’t enough to spark investor enthusiasm.
Revenue Drivers and Divisional Performance
The Specialty Medicines division emerged as the clear winner, posting a 14% gain to £3.2 billion. HIV franchise revenues reached £1.8 billion, advancing 10%. The company’s respiratory, immunology, and oncology portfolio expanded 28% to £0.5 billion, albeit from a lower baseline.
Vaccines delivered £2.1 billion in revenue, representing a 4% uptick. Shingrix, the company’s blockbuster shingles prevention vaccine, stole the show with revenue soaring 20% to a record £1.0 billion. By contrast, Arexvy, GSK’s RSV vaccine, saw turnover decline 18% to £0.1 billion, which management attributed to seasonal dynamics.
General Medicines proved to be the underperformer, contracting 6% to £2.3 billion and falling short of estimates by 3%.
2026 Targets Unchanged, Currency Becomes Headwind
GSK maintained its 2026 financial guidance, continuing to project turnover expansion of 3% to 5% alongside core operating profit growth of 7% to 9%.
Nevertheless, Sterling’s appreciation versus the U.S. dollar is increasingly pressuring reported figures. Jefferies highlighted that this foreign exchange headwind is pushing consensus forecasts toward the top end of management’s guided range.
The pharmaceutical company also revealed modifications to its investor relations schedule. CEO Emma Walmsley and newly appointed commercial leader Luke Miels will present a comprehensive strategy update alongside second-quarter results, supplanting a previously scheduled HIV-focused investor event.
GSK declared a quarterly dividend of 15 pence per share.
Over the trailing twelve months, GSK stock has rallied 42%, substantially outperforming both the FTSE 100 index and the broader Stoxx 600 benchmark.
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