GlaxoSmithKline share results were lacklustre, but I think the future is exciting for those who dare

The latest results from GSK were about as exciting as a cancelled football match, and yet, I think the GSK future is exciting.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

When Emma Walmsley took over as CEO of GlaxoSmithKline (LSE:GSK) she talked about “courage”.

GSK has often felt a little like a sleeping giant. The share price peaked in 1999, but over the last five years have increased by a mere 10%. The dividend remains attractive, and maybe that’s what we want from companies like GSK, whose shares are often the stalwart of a portfolio designed to bring in income — low risk, boring, safe.

The latest results revealed an 8% increase in sales and a 4% increase in earnings. The sales performance was on par with expectations, the earnings a little below. Shares fell modestly.

That’s GSK, not exactly exciting.

But GSK is being divided into a sexy and non-sexy business — not that the company uses those words.

There will be the consumer healthcare business, which will be part of a joint venture with Pfizer — that’s I would call the non-sexy part. And there will be the biopharma business, which is the part that requires courageous staff. This is the part that I think will be the real growth stock.

The biotech revolution

I reckon that the pharmaceuticals and biotech sector is on the verge of a revolution. Advances in computer power seen over the course of this century may lie behind it. Developments in genome sequencing, AI, nanotechnology, and the remarkable potential of gene editing via a technology known as CRISPR/cas 9 (perhaps the world’s single most important discovery in the century so far) are creating extraordinary opportunity.

It is certain that companies that stick with tried and tested formulae, timidity their stock-in-trade, will not be the ones to benefit from this opportunity.

That’s why when I heard Emma Walmsley talk about the need for courage among staff, it was music to my ears.

So, how’s it going? Is GSK really more daring these days, and if it dares, will it win?

The latest results contained morsels to whet my appetite. I am not saying “corr” about the company yet, but maybe I will soon.

In the transcript from the GSK earnings call yesterday, the word ‘data’ was mentioned 51 times. AI and ML (machine learning) was also referred to. I was especially pleased to see Hal Barron, GSK’s head of R&D talk about setting up a laboratory for genomics research to be headed by none other than Jennifer Doudna and Jonathan Weissman, the pioneers behind CRISPR.

I think that Emma Walmsley has been successfully editing the GSK corporate DNA, such that if GSK was a sleeping giant, it is now awake. The shares might not quite shoot up like Jack’s beanstalk, but I think the company is well placed to benefit from the biotech revolution.

I am expecting an exciting five years ahead for GSK shares. I think GSK, at least part of it, is becoming sexy again.  

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Michael Baxter has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended GlaxoSmithKline. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

US Stock

The Nvidia share price falls! Here’s what I think happens next for the S&P 500

Jon Smith reviews the overnight results from Nvidia and explains why this could stall the S&P 500 performance through to…

Read more »

Investing Articles

Down 15% today, is this FTSE 100 share too cheap for me to miss?

JD Sports' share price has tanked after the FTSE 100 share released another profit warning. Is this the opportunity I've…

Read more »

Investing Articles

Up 8% today, is this FTSE 100 growth stock a slam-dunk buy for me?

Halma's share price is soaring thanks to another headline-grabbing trading update. Is the FTSE 100 stock now too good for…

Read more »

Investing Articles

With a P/E ratio of just 10.5 is now a brilliant time to buy a cut-price FTSE 250 tracker?

Harvey Jones says a recent dip in the FTSE 250 leaves the index trading at bargain levels. One stock in…

Read more »

Warren Buffett at a Berkshire Hathaway AGM
Investing Articles

To build a passive income flow, I’d follow this Warren Buffett approach

Warren Buffett has set up passive income streams most people can only dream about. Our writer sees some practical lessons…

Read more »

Growth Shares

As the boohoo share price falls, could it become a penny stock in 2025?

Jon Smith outlines some of the recent problems involving the boohoo share price and considers if things could get even…

Read more »

Young Asian woman with head in hands at her desk
Investing Articles

Here are the worst-performing FTSE 100 shares over the last 5 years

These five FTSE 100 shares have been complete duds over the last half decade. But is there potential for a…

Read more »

Investing Articles

Nvidia stock has tripled this year! Can it keep rising?

Nvidia's latest sales update showed strong growth and the stock's been on a tear so far in 2024. So is…

Read more »