LONDON, June 23 (Reuters) - GSK set out plans on
Wednesday to turn its consumer healthcare business into a
separately listed company, aiming to strengthen drug development
at its pharmaceuticals business with an 8 billion pound ($11
billion) windfall.
GSK said it aimed to sell a residual 20% stake in the newly
listed consumer business "in a timely manner".
Here is some analyst reaction:
JPMORGAN:
"We see the key positive for the market today being a
smaller dividend cut than feared, we see the key negative for
the market being the 20% sale of the Consumer stake, which will
dilute GSK shareholders exposure to this segment, and which
could see some value going to the taxman. The 2031 Biopharma
Revenue target of more than 33 billion pounds ($46 billion)is
far above our expectations."
"Given fairly low expectations heading into today’s update,
we believe shares could see slight outperformance on the smaller
than feared dividend cut, and increased clarity on company
expectations. For further outperformance, we will need to
understand how GSK plan to get to their ambitious 2031 Revenue
target, in particular, how they will navigate the dolutegravir
patient expiry in 2028."
JEFFERIES
"Timing the Buy is tricky but the current share price offers
compelling value, in our view."
QUILTER CHEVIOT
"GSK’s announcement contained a whole host of market
friendly targets, including a welcome target for double digit
profit growth over the next five years that will need to be
underpinned by a belief in the products in development and the
segments the company will be focusing on," said Chris Beckett,
head of equity research at investment firm Quilter Cheviot.
"The dividend reset, which works out at a 31% cut, is hardly
good news, but it is not unexpected considering long-term
concerns around true free cash flow cover. At 55p, the aggregate
dividend across the two new companies works out to be a yield of
3.9% for FY22 versus the 6% yield for FY21."
"It will not be a completely clean break from the new
consumer business. The rationale for an ongoing investment in
the consumer business will need to be explained by the
executives. Investors won’t appreciate the overhang."
($1 = 0.7153 pounds)
(Compiled by Alistair Smout and Pushkala Aripaka
Editing by Keith Weir)
Glaxosmithkline (GSK)