GSK posts solid results for 1st-qtr 2007 with a 14% EPS rise despite US generic pressure

UK drug major GlaxoSmithKline says that its first-quarter 2007 operating profit reached L2.17 billion ($4.3 million), up 11% on the like, year-ago period, as profit after tax grew 10% to L2.14 billion, level with growth in operating profit due to higher net interest costs being offset by a lower expected tax rate for the year.

Revenues for the firm, which is the world's second-largest drugmaker by sales, were slightly behind analysts' consensus estimate at L5.59 billion versus L5.68 million. The London-headquartered group's earnings per share rose 14% to L0.27 beating Lehman Brothers' L0.23 prediction.

GSK's solid results prompted Deutsche Bank to raise its rating to buy from hold and increase its price target to L17.00 from L15.50. In a note to investors, Lehman Brothers analyst Matthew Weston was more cautious, retaining his 2-equal weight rating on the firm, with a L15.10 price target. "2007 is a challenging period for GSK as four products with combined sales of L2.2 billion are lost to generic entry in the year. Assuming an average 50% contribution margin, GSK will lose over L1.0 billion of annualized earnings before interest and tax this year," he said.