Earnings season recap: the GSK share price is up, while the Tullow Oil share price tanks
The British drug maker saw its shares rally to a 17-year high after a strong third quarter, while the UK-based oil and gas company watched its stock plummet after downgrading its full-year production guidance.
Earnings season has delivered some highs and lows for various stocks, with GlaxoSmithKline (GSK) reaping the rewards of its joint venture with Pfizer in a move that has created a market leader in consumer healthcare and sent its shares soaring.
Meanwhile, Tullow Oil has seen its shares rocked after it was forced to downgrade its full-year production guidance due to issues at drill sites in Ghana.
GSK sees shares soar to 17-year high and could see further gains
GSK saw its share price close to a 17-year high of £17.82 after its third quarter (Q3) results last month.
The drug maker recorded strong sales growth in the trading period, prompting it to upgrade its full-year earnings forecast.
‘GSK has made further good progress in Q3, with sales growth across all three businesses, and we have today upgraded our full-year EPS guidance,’ GSK CEO Emma Walmsley said.
‘This quarter we have continued to strengthen our pipeline and have advanced assets in Respiratory, HIV and, notably, Oncology, where we are on track to file three innovative medicines by year end, following positive pivotal trial data.’
Analysts remain upbeat about the prospect of the stock not only returning to record levels but breaking above them.
Analysts at DZ Bank remain the most optimistic, reiterating their ‘buy’ rating for the stock in October and issuing a target price £20 a share. Liberum Capital and Credit Suisse gave a price target of £18.90 and £18 respectively.
Based on the stock’s current price of £17.14 as of 16:00 GMT on Tuesday, the three banks believe that GSK’s share price has a potential upside of between 5% to 16.6%.
GSK will unveil its fourth quarter results on February 5.
Tullow Oil sees share price tank after downgrading full-year production
Tullow Oil saw its share price plummet more than 30% last week after it downgraded its full-year production guidance.
Full-year 2019 oil production is forecast to average around 87,000 barrels of oil per day. This is slightly below previous guidance, primarily due to weaker-than-expected production performance at its operations in Ghana, with drilling suspended at its TEN fields site in July.
‘In West Africa, our non-operated assets continue to perform well,’ Tullow Oil CEO Paul McDade said. ‘However, Ghana production has not met our expectations this year and we are working closely with our Joint Venture Partners to ensure that both fields perform to their potential.’
However, the UK-based oil and gas company still has a bright future ahead of it, according to analysts from JP Morgan and Jefferies International.
Even though the pair downgraded their target price for the stock to 249p and 168p respectively in November, both banks believe that its share price has a potential upside of between 20% and 77.8% based on it trading at 140p as of 16:00 GMT on Tuesday.
IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.
The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.
Please see important Research Disclaimer.
Seize a share opportunity today
Go long or short on thousands of international stocks.
- Increase your market exposure with leverage
- Get spreads from just 0.1% on major global shares
- Trade CFDs straight into order books with direct market access
Live prices on most popular markets
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.