GSK had a decent beat. Will be taken well as expectations were so low.

3Q profits beat the estimates as HIV drug sales along with vaccines and consumer health-care products climbed.

Now over to the CC to tell us they are splitting the business up following the Sky news report last week.

That is where the real upside is in this name and the main reason we have held this name for a while.

Most analysts have it on a hold rating. Is this the start of upgrades?

Next catalyst R&D Day on Nov 3rd.



Friday • 20 March 2015 • 08:54

We have liked GSK for a while, however we are pushing again here (currently +5% on trade)

Valuation is compelling and expectation for the stock are low given a 30% cut to 2015-17E in 2014

Great dividend of over 5% vs with good scope to increase; UK 10yr pays 1.5%!

There is blocker buster potential with Tivicay/Triumeq & HZ/zu unappreciated by the market

We think that the CEO Witty will leave this year, which we expect to be received positively

This will lead to a CSGN moment as Dougan resigned and the stock was up 10%

Called down this morning by a bulge bracket on FDA result on Breo last night

We use the opportunity to add or open a long. Looking for 1800p



Friday • 19 September 2014 • 14:49

Been a serial underperformer in the sector for good reasons

The announcement to pay GBP297m in fines to end the China corruption probe is a major positive, as there was is no ban on China business

This draws a line under the whole China saga that has weighed on the stock the past year

We see this as a catalyst for the stock to start outperforming and provides a great entry point

The stock is very cheap historically with a great pipeline and massive exposure to biotech which is not even looked considered in valuation

GSK however has many options to unlock value; from reorganisation to spin-offs

Maybe Witty will move aside and if the Pzier/AZN completes, this will leave GSK as the only pure pharma play in the FTSE and other indices

We would not discount GSK being a target for an inversion deal themselves

Buy here at an attractive entry point with very limited downside as the pharma bull market marches on



Wednesday • 23 July 2014 • 16:04

GSK look pretty painful and has been for us (-8%) but to year end it is a good trade. Talk of divi under pressure post call is unfounded as verified on the CC by CEO. SHP deal gets done and when that is followed by AZN attention will turn to GSK and they will re-rate.

We buy more here.



Monday • 05 May 2014 • 16:21

Reading a piece from Exane on the AstraZeneca and the index implications.

They are saying the new entity as most people think will be UK incorporated holding company and to be listed on the New York Stock Exchange. If the deal goes ahead Astra will leave most of the European Indices. (FTSE UK (FTSE All Share, 350 and 100), FTSE All World Europe, MSCI Standard Europe, STOXX Europe 600.)

If the deal completes EAFE, European and UK Index fund managers (i.e. not being exposed to US stocks) are likely to sell their shares, which could create a significant supply on AZN shares that would materialise at the UK close.

I think the deal will complete as it is very accretive to Pfizer. They will bump the deal in overall terms or through increasing the cash component. I actually think they will end up doing both.

This will leave GSK as the only pure pharma play in the FTSE and other indices.

GSK is trading where it is due to awful sentiment and rightly so due to Corruption issues and the recent manufacturing issues at the Irish API plant.

GSK however has many options to unlock value from reorganisation to spin-offs. An article in the Economist even mentions a take over from Novartis. Although unlikely it just shows what options they have.

There is not much positive noise around GSK right now but when the AZN/PFE deals go through eyes and flows will turn back to GSK. It will not take much to make them attractive again. Sentiment is low.

The money will go somewhere and GSK has to be the number 1 candidate. This with the continued pharma bull market, multiple options open to GSK and a 5% yield makes GSK very attractive right now.