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Tuesday, October 27, 2020

Investor Confidence is Falling for GlaxoSmithKline plc (NYSE:GSK)

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GlaxoSmithKline plc (GSK) shares are trading at lower $37.19 and the avg recommendation for the stock is Moderate Buy, while the current analyst price target stands at $48.67.

To add more color to this target, the company’s high over the last year is $48.25 and the low is $31.43. Over the last 52 weeks, GSK is down -11.81% while the S&P 500 is up 18.31%. The catalyst for this interesting swing was the company’s recent earnings report.

A Notable Earnings Report

In the last quarter, GSK reported a profit of $6.42 billion. GlaxoSmithKline plc also saw revenues increase to $9.46 billion. In addition, GSK has free cash flow of $4.1 billion as of 06-2020. The company’s EBITDA came in at $2.08 billion which compares well with its peers.

GSK booked profit margins of 19.10%, its Return on Equity (ROE) is 53.60%, and its Return on Assets is 8.00%. All told, it is clear that, GSK needs to be on your watchlist.

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Of course, we must look beyond the financials and question how well those numbers represent the sustainable earnings power of the business. Investors need to know how sustainable this current run. GSK has a short ratio of 3.74 and outstanding shares of 2.49B.

Company Outlook

GSK has seen increased volume after this news and investors are putting their support behind the value proposition. Furthermore, 10-day volume stands at 3.49 million and more growth is possible in the weeks ahead. Traders will also note the company’s earnings per share came in at 3.44. GlaxoSmithKline plc GSK also noted assets of $105.03 billion at the end of the last quarter. Investors should also keep an eye on sector updates as GSK has historically followed its peers on positive news.

All told, GlaxoSmithKline plc GSK has strung together solid data and demonstrated underlying fundamentals. At its current valuation, GSK represents an interesting risk/reward case. Traders should stay tuned to see if this recent report will push the stock to test recent resistance levels.

GlaxoSmithKline plc GSK is now commanding a market cap of 91.56B and a float of 2.48B. GSK is increasing its credibility in this sector and that could lead to more upside down the line. Sign-up for continuing coverage on shares of GSK stock, as well as other hot stock picks, get our free newsletter today and get our next breakout pick!

Disclosure: we hold no position in GSK, either long or short, and we have not been compensated for this article.

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