Key Takeaways
- GSK delivered Q1 core EPS of 46.5p, surpassing the Street’s 43.5p forecast
- Approximately 50% of the earnings outperformance originated from legal settlement provisions rather than operational drivers
- Shingrix vaccine revenue surged 20% to £1.0 billion; Arexvy RSV vaccine declined 18%
- Full-year 2026 guidance remained unchanged, though Sterling strength poses FX headwinds
- Shares declined approximately 3% following the earnings release
GSK delivered first-quarter earnings that topped analyst forecasts on Wednesday, yet the pharmaceutical giant’s shares still retreated roughly 3% as investors scrutinized the composition of the beat.
Core operating profit for the quarter ending March 31 climbed 10% on a constant currency basis to £2.65 billion, comfortably exceeding the company-compiled Street consensus of £2.46 billion. Core earnings per share reached 46.5 pence, representing a 9% year-over-year increase and beating the 43.5 pence projection.
However, equity analysts at Jefferies were quick to point out a critical detail: approximately half of the upside surprise derived from favorable legal settlement provisions instead of fundamental business momentum. “Core Operating Income and Core EPS both 7% ahead of consensus, but c50% of that driven by legal settlement provisions,” the research firm noted.
Revenue increased 5% at constant exchange rates to £7.6 billion, precisely in line with analyst expectations. While respectable, this top-line figure alone didn’t provide sufficient momentum to sustain the share price.
Dissecting the Revenue Performance
The Specialty Medicines division emerged as the clear winner, advancing 14% to £3.2 billion. HIV therapies contributed £1.8 billion, marking a 10% increase. The company’s respiratory, immunology, and oncology franchise expanded 28% to £0.5 billion, albeit from a comparatively modest baseline.
Vaccine sales totaled £2.1 billion, representing a 4% uptick. Shingrix, the company’s blockbuster shingles prevention vaccine, stole the spotlight—sales accelerated 20% to reach a record £1.0 billion. Conversely, Arexvy, GSK’s RSV vaccine, posted an 18% decline to £0.1 billion, which management attributed to normal seasonal fluctuations.
The General Medicines segment presented challenges, contracting 6% to £2.3 billion and falling 3% short of analyst projections.
Outlook Unchanged Despite Currency Headwinds
GSK maintained its 2026 financial targets, continuing to project revenue growth between 3% and 5% alongside core operating profit expansion of 7% to 9%.
Nevertheless, Sterling’s appreciation versus the U.S. dollar is introducing pressure on reported figures. Jefferies highlighted that this foreign exchange headwind is pushing consensus forecasts toward the high end of management’s guidance band.
In a shift to its investor engagement calendar, GSK revealed that CEO Emma Walmsley and newly appointed commercial chief Luke Miels will present a comprehensive strategy briefing when second-quarter results are released, replacing a standalone HIV-focused event that had been on the schedule.
The pharmaceutical company declared a quarterly dividend of 15 pence per share.
GSK stock has appreciated 42% over the trailing twelve months, substantially outperforming both the FTSE 100 index and the wider Stoxx 600.
