GSK guidance looking 'increasingly challenging', says UBS

UBS has reduced its target price for GlaxoSmithKline (GSK) from 1,650p to 1,500p, saying that forecasts for earnings growth may continue to prove elusive for the pharmaceutical group."The prospect of earnings per share (EPS) growth has been delayed year after year at GSK. Consensus - as every year - continues to project growth from next year," UBS said."However, such acceleration seems increasingly unlikely in view of numerous headwinds (weak execution in respiratory, increasing competition in respiratory and oncology, uncertain outlook in emerging markets, negative mix effects, and addiction to non-recurring items)."The bank retained its 'neutral' recommendation, saying that guidance for 2014 "looks increasingly challenging".The launch of a generic version of Lovaza by Teva Pharmaceutical Industries this month will have reduced GSK's chances of reaching the upper end of its guidance for core EPS growth of 4-8% at constant currencies this year, UBS said.Meanwhile, US prescription trends in the first quarter suggest that "even the lower end may be tough to achieve".The bank has made 2-5% reductions to its EPS forecasts at GSK over 2014-2018. Its new estimates stand 10-15% below consensus forecasts "yet could still be too optimistic"."Consensus may be slow to reflect GSK's deteriorating growth outlook, but we expect this to become increasingly reflected in the multiple," UBS said. "It also added that dividend growth expectations going forward "might not be met".The stock was down 1% at 1,547.71p by 11:49.BC