TLDR
- GSK delivered Q1 core EPS of 46.5p, surpassing analyst expectations of 43.5p
- Legal settlement provisions accounted for approximately 50% of the profit outperformance
- Shingrix vaccine revenue surged 20% to reach £1.0 billion; RSV vaccine Arexvy declined 18%
- Full-year targets unchanged, though currency headwinds from stronger Sterling noted
- Shares declined approximately 3% following the earnings release
GSK delivered first-quarter earnings that exceeded Wall Street expectations on Wednesday, yet the market response was decidedly lukewarm. Shares tumbled roughly 3% as investors scrutinized the underlying drivers of the beat.
Core operating profit for the quarter ending March 31 increased 10% on a constant currency basis to £2.65 billion, significantly outpacing the company-compiled analyst consensus of £2.46 billion. Core earnings per share reached 46.5 pence, representing a 9% year-over-year increase and comfortably above the 43.5 pence forecast.
However, equity analysts at Jefferies were quick to point out that approximately half of the earnings outperformance stemmed from legal settlement provisions rather than fundamental operational strength. “Core Operating Income and Core EPS both 7% ahead of consensus, but c50% of that driven by legal settlement provisions,” the research firm highlighted.
Revenue climbed 5% at constant exchange rates to £7.6 billion, in line with consensus forecasts. While respectable, the top-line figure alone didn’t generate significant investor enthusiasm.
Revenue Performance Breakdown
The Specialty Medicines division delivered the strongest performance, advancing 14% to £3.2 billion. HIV therapies contributed £1.8 billion, representing 10% growth. The respiratory, immunology, and oncology segment expanded 28% to £0.5 billion, albeit from a more modest baseline.
Vaccines generated £2.1 billion in revenue, up 4%. Shingrix, the company’s shingles prevention vaccine, emerged as the star performer — sales soared 20% to £1.0 billion, setting a new record. Arexvy, the RSV vaccine, saw revenue decline 18% to £0.1 billion, which GSK attributed to seasonal demand fluctuations.
General Medicines represented the laggard, falling 6% to £2.3 billion and coming in 3% below analyst projections.
Outlook Maintained Despite FX Headwinds
GSK reaffirmed its 2026 financial targets, maintaining expectations for revenue growth of 3% to 5% and core operating profit expansion of 7% to 9%.
Nevertheless, Sterling’s appreciation against the U.S. dollar is creating a notable headwind for reported figures. Jefferies observed that the foreign exchange drag is pushing consensus estimates toward the upper boundary of the guided range.
GSK also revealed an adjustment to its investor relations schedule. CEO Emma Walmsley and newly appointed commercial head Luke Miels will present a comprehensive strategy update alongside second-quarter results, substituting for a previously scheduled HIV-focused event.
The pharmaceutical giant declared a quarterly dividend of 15 pence per share.
GSK stock has advanced 42% over the trailing twelve months, substantially outperforming both the FTSE 100 index and the wider Stoxx 600 benchmark.
