Broker snap: GSK remains a 'hold'

22nd Oct 2010 12:15

Panmure Gordon has not changed its forecasts for GlaxoSmithKline following third quarter results that failed to rouse much excitement.The drugs firm's results were broadly in line with the broker's expectations reporting revenues of £6.81bn and earnings per share of 28.2p.The broker recently downgraded GSK to 'hold' from 'buy' after the group's removal of its Avandia product from Europe because the withdrawal "introduces forecast risk to the 2011 financial year and results in a relatively weak prospective year".Gross margin was reported at 72.5% compared with the broker's forecast of 73%. Analyst Savvas Neophytou said, "the company's outlook on gross margin was maintained at 74% which demonstrates the resilience of the business given the unexpected head winds of Avandia in particular in the second half of 2010, but also intensifying 'austerity' measures by governments in Europe.""We are not changing our forecasts and expect the stock price to remain range bound at at least until the second half of 2011," Neophytou added.The 'hold' recommendation remains with a price target of 1,350p.