Why GlaxoSmithKline (GSK) Stock Is Down Today

NEW YORK (TheStreet) -- Shares of GlaxoSmithKline Plc  (GSK) are down -1.99% to $55.27 as the healthcare group reported first quarter sales declined 10% as its main lung drug Advair grappled with an increasingly difficult U.S. market.

Sales were $9.45 billion as core earnings per share slipped 20%, below analysts forecasts.

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The company reiterated its target of increasing 2014 EPS between 4% and 8%.

Also, CEO Andrew Witty all but ruled out a white knight bid against Pfizer's (PFE) takeover move for AstraZeneca  (AZN), reiterating scepticism on big takeover deals in the sector, the Financial Times reports

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 revenue growth, notable return on equity, compelling growth in net income, good cash flow from operations and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth greatly exceeded the industry average of 1.4%. Since the same quarter one year prior, revenues rose by 29.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. 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.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Pharmaceuticals industry. The net income increased by 194.2% when compared to the same quarter one year prior, rising from $1,426.48 million to $4,196.37 million.
  • Net operating cash flow has increased to $3,823.62 million or 21.59% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -22.12%.
  • 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.
  • You can view the full analysis from the report here: GSK Ratings Report
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