NEW YORK (TheStreet) -- GlaxoSmithKline Plc's (GSK - Get Report) former China chief Mark Reilly was accused by Chinese authorities today of ordering his subordinates and other employees to bribe hospital doctors, health-care organizations and other parties on "a large scale" to boost Glaxo's drug sales in China, the Wall Street Journal reports.
That helped Glaxo reap billions of yuan in additional revenue between 2009 and 2012, they said.
The unusual move could signal that China's efforts to tame its pharmaceutical market-and, more broadly, to stamp out pervasive corruption and bribery in the world's number two economy-could increasingly put foreign executives in its sights, experts say, the Journal notes.The company said in a statement that it takes the allegations seriously. Glaxo's shares are flat in heavy trading this afternoon. TheStreet Ratings team rates GLAXOSMITHKLINE PLC as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation: "We rate GLAXOSMITHKLINE PLC (GSK) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its notable return on equity, increase in stock price during the past year and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income." Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Pharmaceuticals industry and the overall market, GLAXOSMITHKLINE PLC's return on equity significantly exceeds that of both the industry average and the S&P 500.
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- GLAXOSMITHKLINE PLC's earnings per share declined by 24.6% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, GLAXOSMITHKLINE PLC increased its bottom line by earning $3.68 versus $2.92 in the prior year. This year, the market expects an improvement in earnings ($109.43 versus $3.68).
- The gross profit margin for GLAXOSMITHKLINE PLC is rather high; currently it is at 69.50%. Regardless of GSK's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 11.84% trails the industry average.
- GSK, with its decline in revenue, slightly underperformed the industry average of 5.2%. Since the same quarter one year prior, revenues slightly dropped by 5.4%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- You can view the full analysis from the report here: GSK Ratings Report