TLDR
- GSK delivered Q1 core EPS of 46.5p, surpassing the 43.5p consensus forecast
- Legal settlement accounting contributed approximately 50% of the earnings outperformance
- Shingrix vaccine revenues soared 20% to £1.0 billion; Arexvy RSV vaccine declined 18%
- Full-year targets unchanged, though stronger Sterling creates currency headwinds
- Shares declined approximately 3% following the earnings release
GSK unveiled first-quarter earnings that exceeded analyst projections on Wednesday, yet investors responded with selling pressure. Shares slid roughly 3% as market participants examined the underlying drivers of the beat.
Core operating profit for the quarter ending March 31 climbed 10% on a constant currency basis to £2.65 billion, significantly outpacing the £2.46 billion consensus compiled by the company. Core earnings per share reached 46.5 pence, representing a 9% year-over-year increase and exceeding the 43.5 pence forecast.
However, equity research analysts at Jefferies swiftly highlighted that approximately half of the upside surprise stemmed from favorable legal settlement provisions instead of operational strength. “Core Operating Income and Core EPS both 7% ahead of consensus, but c50% of that driven by legal settlement provisions,” the brokerage firm noted.
Overall revenue increased 5% at constant currency to £7.6 billion, precisely in line with market expectations. While respectable, this figure alone wasn’t sufficient to excite the market.
Revenue Drivers Across Business Segments
The Specialty Medicines division delivered the strongest performance, advancing 14% to £3.2 billion. HIV franchise sales generated £1.8 billion, representing 10% growth. The combined respiratory, immunology, and oncology portfolio surged 28% to £0.5 billion, albeit from a considerably smaller revenue base.
Vaccine sales totaled £2.1 billion, marking a 4% increase. Shingrix, the company’s shingles prevention vaccine, emerged as the star performer — sales jumped 20% to reach a record £1.0 billion. Meanwhile, Arexvy, the RSV vaccine, saw revenues drop 18% to £0.1 billion, with management attributing the decline to normal seasonal demand fluctuations.
General Medicines represented the underperforming segment, falling 6% to £2.3 billion and coming in 3% below analyst projections.
2026 Outlook Maintained Despite FX Challenges
GSK maintained its 2026 financial targets, continuing to project revenue expansion of 3% to 5% alongside core operating profit growth of 7% to 9%.
Nevertheless, Sterling’s appreciation against the U.S. dollar is applying pressure to reported financial results. Jefferies observed that the foreign exchange headwind is pushing consensus forecasts toward the top end of management’s guidance range.
GSK additionally announced modifications to its investor relations calendar. Chief Executive Emma Walmsley and newly appointed commercial leader Luke Miels will present a comprehensive strategic update concurrent with Q2 earnings, substituting for a previously scheduled HIV-focused investor event.
The pharmaceutical company declared a quarterly dividend of 15 pence per share.
GSK shares have appreciated 42% over the trailing twelve months, substantially outperforming both the FTSE 100 index and the wider Stoxx 600 benchmark.
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