Broker snap: Mixed views on Glaxo

29th Oct 2009 13:00

Panmure Gordon is upgrading its earnings forecast for GlaxoSmithkline for the second time in six months, even though it described the pharmaceuticals behemoth's third quarter results announced on Wednesday as 'unspectacular'.The broker has nudged up full-year 2009 earnings per share (EPS) estimates from 111.4p to 113.5p, and 2010 EPS estimates up from 107.2p to 114.7p.Panmure Gordon expects further market upgrades next Monday when the results of the BLISS-76 study on belimumab is published; belimumab is an antibody, developed by Human Genome Sciences and GlaxoSmithkline (GSK), for the treatment of tissue disease, Systemic Lupus Erythematosus (SLE).'In the pipeline, we eagerly await publication of a second phase III trial for Lupus drug candidate Benlysta on Monday 2 November. Of more immediate importance, darapladib appears to have passed its first interim safety review, revealing no troublesome safety signals particularly relating to blood pressure elevation. This allows the project to continue with the launch of a second phase III trial, in some 13,000 patients,' the broker notes.Darapladib represents 'a significant Greenfield opportunity' for Glaxo, the broker reckons. If it succeeds in redefining how atherosclerosis is prevented, it could be a '$7bn-8bn opportunity,' the broker claims.On projected 2010 earnings the stock is trading on a price/earnings ratio, putting it in line with the European pharmaceuticals sector. The broker rates the stock as a 'buy', with the dividend income there to provide support. Panmure's price target remains unchanged at 1,400p.In contrast, Standard & Poors Equity Research rates the stock no more than a 'hold', though it sees some positive aspects.'The positive impact of Cervarix (HPV vaccine) finally approved by the FDA [US Food and Drug Administration] this month - two years behind our original forecast - remains to be seen in 2010. GSK's unique adjuvant (immune enhancer) may bring a paradigm shift in vaccines due to its longer shelf life (2-3 years) with flexibility for variable antigens,' analyst Sho Matsubara notes, adding that the company should book £800m of pandemic flu vaccines sales in the fourth quarter.The research agency has has lifted its blended 12-month price target for Glaxo from 1170p to 1330p.