Broker snap: Tough first quarter expected for GSK

21st Apr 2011 10:16

Credit Suisse lowers some of its first quarter estimates for pharmaceutical giant GlaxoSmithKline (GSK), saying that the period will suffer tough comparatives.GSK will reports its first quarter results next week and the broker notes that, like the fourth quarter of 2010, the first three months of the year will suffer tough comparatives with the absence of pandemic flu revenue. Credit Suisse forecasts an 11% decline in group revenues, but says that - adjusted for flu, Avandia and Valtrex - first quarter sales growth will be flat at best. Since its last published research, the broker has reduced its sales and earnings forecasts for GSK by 2-3% per annum following a US dollar weakening against the pound."It is well understood that GSK will have a tough first quarter but sales growth for the remainder of this year is unremarkable. It is clear that cost savings will not enhance the bottom line in 2011. With the share buyback program in place, we see little momentum for the stock from here," said the broker.A 'neutral' rating and 1,310p target price are retained.---bc