Pharmaceuticals group GlaxoSmithKline, which performed relatively well amidst last year's stock market chaos, has slipped back today despite a buy note and what could be good news on the competition front.
There are reports from India that rival Ranbaxy failed to launch generic copies of migraine treatment Imitrex in the US in December. According to analyst Savvas Neophytou at Panmure Gordon, that could benefit Glaxo well into the new year. In a buy note Panmure said:
"Indian generics manufacturer Ranbaxy [has reportedly failed] to obtain registration for its generic copy of Imitrex. The generic had been expected in December 2008 so given lack of registration for the generic at least one extra month of revenues unopposed was achieved in 2008. If the delay in regulatory approval relates to well known manufacturing issues for Ranbaxy then the benefit could continue until May 2009, which will be an unexpected bonus for [GlaxoSmithKline]. Each additional month of revenues represents around 1% of operating profits for the group.
"The reason for the delay is unknown but could be related to the [US regulator] FDA ban in September which stopped Ranbaxy from importing more than 30 generic drugs to the US for not meeting some manufacturing norms at two plants in India.
"[GlaxoSmithKline] stock is trading on P/Es of 11.5x for 2009 and 9.8x for 2010. Its earnings per share is below the sector average, but we expect the dividend yield of 5.3% to provide support and remain buyers. Overall in the sector we still prefer AstraZeneca which is trading at a 56% discount to GlaxoSmithKline but, given our positive stance on the sector in general, we also advocate buying GlaxoSmithKline at these levels."
So far the message is being ignored, however, and GlaxoSmithKline is down 29p at £12.55.
Overall though the market has made a fairly bright if quiet start to the new year. With Asian markets edging higher the FTSE 100 is currently 22.94 points ahead at 4457.11.
The heavyweight mining and banking sectors are among the main gainers, with Vedanta Resources up 38.5p to 650p and Rio Tinto rising 53p to £15.43.
HBOS is up 2.6p at 71.6p while Royal Bank of Scotland has climbed 1.7p to 51.1p.
Good sales figures from John Lewis immediately before and after Christmas has helped lift Next 15p to £10.96, with Marks & Spencer - tipped by Seymour Pierce recently to make a January profit warning - up 0.5p at 215.25p.
Lower down the market chocolate retailer Thorntons is down 8.5p at 91.5p on worries about seasonal trading.
No comments:
Post a Comment