Broker snap: JPMorgan upgrades Glaxo on upcoming catalysts

14th Aug 2013 10:30

JPMorgan Cazenove has upgraded its rating for pharmaceuticals giant GlaxoSmithKline (GSK) from 'underweight' to 'neutral', saying that the upside from upcoming catalysts now balances out earnings risk.The US bank said: "Whilst we believe consensus [company-collated] expectations for 2014 core EPS could prove slightly too ambitious, we see numerous datapoints over the next six months that could drive upgrades."JPMorgan said that its proprietary physician survey suggests "fairly strong uptake" of GSK's respiratory drug Breo which should offer some protection against the long-term threat arising from US generic versions of its Advair treatment. It also said that the Anoro treatment for chronic obstructive pulmonary disease (COPD), if approved by the AdCom panel next month, could provide a "significant share-price boost".Darapladib for cardiovascular disease meanwhile is seen as high risk "but potentially high reward".Updating its estimates for upcoming divestments and the second-quarter results, JPMorgan has trimmed its 2014-2016 revenue forecasts by 3-4% and cut its EPS predictions by 1-5% - these now stand 5-6% behind consensus estimates.The target price for the stock has been reduced slightly from 1,910p to 1,900p.The stock was 1.04% higher at 1,697.5p by 10:30 on Wednesday.BC