NEW YORK (TheStreet) -- Shares of GlaxoSmithKline (GSK) rose 2.94% to $43.28 in afternoon trading Thursday after the pharmaceutical company announced its experimental shingles vaccine HZ/su met its primary endpoint in a Phase III trial.
GlaxoSmithKline announced Thursday that HZ/su, designed to prevent shingles, decreased the risk of shingles by 97.2% in adults aged 50 years and older when compared to placebo in the late-stage study to assess the efficacy of HZ/su.
These are the first results from the ZOster Efficacy study in adults aged 50 years and older. The study began in August 2010 and continues in 18 countries with more than 16,000 people.
Separately, TheStreet Ratings team rates GLAXOSMITHKLINE PLC as a "buy" with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate GLAXOSMITHKLINE PLC (GSK) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its notable return on equity 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.
- GLAXOSMITHKLINE PLC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from 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 ($97.77 versus $3.68).
- GSK, with its decline in revenue, underperformed when compared the industry average of 8.7%. Since the same quarter one year prior, revenues fell by 35.5%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The gross profit margin for GLAXOSMITHKLINE PLC is rather high; currently it is at 66.18%. 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, GSK's net profit margin of 6.95% is significantly lower than the industry average.
- The share price of GLAXOSMITHKLINE PLC has not done very well: it is down 15.72% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.
- You can view the full analysis from the report here: GSK Ratings Report