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GlaxoSmithKline PLC ADR - Stock Quote GSK

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Morningstar's GlaxoSmithKline PLC ADR Stock Analysis

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Buoyed by One-Time Gains, Undervalued Glaxo Posts Strong Q1 With Solid Underlying Core Growth

Damien Conover, CFA Sector Director

Analyst Note

| Damien Conover, CFA |

GlaxoSmithKline reported strong first-quarter results ahead of our estimates, but we don’t expect any major fair value estimate change based on the outperformance that was aided by several one-time benefits. We view the stock as undervalued, with the market not fully appreciating Glaxo’s growth potential. Also, the upcoming consumer healthcare divestment (called Haleon) in mid-2022 holds potential to create value. Relative to comparable market valuations (but lacking all the financial data needed for our traditional discounted cash flow analysis), Haleon’s valuation could be close to GBP 50 billion, which would imply solid valuation expansion potential for the remaining Glaxo business. We believe Haleon’s brand power holds potential to support a moat, and intangible assets (largely patents) should support Glaxo’s wide moat following the Haleon divestment.

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GlaxoSmithKline PLC ADR's Company Profile

Business Description

In the pharmaceutical industry, GlaxoSmithKline ranks as one of the largest firms by total sales. The company wields its might across several therapeutic classes, including respiratory, cancer, and antiviral, as well as vaccines and consumer healthcare products. Glaxo uses joint ventures to gain additional scale in certain markets like HIV and consumer products.

980 Great West Road
Brentford, Middlesex, TW8 9GS, United Kingdom
T +44 2080475000
Sector Healthcare
Industry Drug Manufacturers - General
Most Recent Earnings Mar 31, 2022
Fiscal Year End Dec 31, 2022
Stock Type
Employees 90,083

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