Broker snap: Votrient approval a boost for Glaxo

6th Oct 2009 12:04

GlaxoSmithKline's experimental kidney cancer drug Votrient has been given a unanimous endorsement by the US Food and Drugs Administration, removing some downgrade risk from the stock, broker Panmure Gordon believes.Panmure Gordon has reiterated its 'buy' recommendation and 1400p price target for Glaxo, saying 'the strong endorsement also sets the scene for upgrades if Votrient proves successful in larger cancer indications such as breast and lung cancers.'The broker's forecasts for Votrient are substantially risk adjusted, but on the basis the drug will hit the market in 2010 it is predicting revenues of £25m in 2010, rising to £100m in 2011 and to £400m by 2013.The shares are trading on a forward price/earnings ratio of 11.4, in line with the rest of the European pharmaceutical. 'Growth is not going to be easy and will be fairly low quality in the short term, with cost containment central to the thesis, but we expect the dividend yield of 5.2% to provide support,' the broker said.