GlaxoSmithKline (GSK) Stock Gains Following Meningitis Vaccines Sale to Pfizer

NEW YORK (TheStreet) -- GlaxoSmithKline (GSK) shares are up 0.6% to $43.32 in pre-market trading on Monday after the healthcare company agreed to sell two of its meningitis vaccines to Pfizer (PFE) for $131 million today, according to the Wall Street Journal

The sale was a result of its obligation to divest some of its properties in an effort to alleviate anti-trust concerns raised by European regulators over its proposed series of asset swaps with Novartis (NVS) that are worth more that $20 billion. 

GlaxoSmithKline acquired Novartis's global vaccine business, excluding influenza vaccines, for $5.25 billion in March, leading to the regulatory scrutiny that necessitated today's sale to Pfizer.

The two vaccines, Nimenrix and Mencevax, which are sold outside of the U.S, had global sales of $54 million in 2014.

Pfizer shares are flat at $34.18 in pre-market trading.

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 revenue growth, notable return on equity, attractive valuation levels, expanding profit margins and compelling growth in net income. We feel its strengths outweigh the fact that the company shows weak operating cash flow."

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

  • GSK's very impressive revenue growth greatly exceeded the industry average of 2.1%. Since the same quarter one year prior, revenues leaped by 127.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • 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.
  • The gross profit margin for GLAXOSMITHKLINE PLC is currently very high, coming in at 86.48%. It has increased significantly from the same period last year. Along with this, the net profit margin of 56.13% significantly outperformed against the industry average.
  • 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 978.4% when compared to the same quarter one year prior, rising from $1,113.89 million to $12,012.17 million.
  • You can view the full analysis from the report here: GSK Ratings Report

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