Key Developments In Three FTSE 100 Health Care Companies- AZN, GSK, and RB.

  • Oct 24, 2019 BST
  • Team Kalkine
Key Developments In Three FTSE 100 Health Care Companies- AZN, GSK, and RB.

Despite the lacklustre performance of the LSE's broader index, the FTSE 100, on a Year-to-Date basis, the Health Care constituent stocks of the broader index performed far better against the index as a whole. With AstraZeneca Plc leading the sector as its shares added 17.8% on a year-to-date basis, followed by Smith & Nephew Plc (up 14.3%), Hikma Pharmaceuticals Plc (up 14.2%) and GlaxoSmithKline Plc (up 12.8%), respectively. This reflects that healthcare-oriented companies of the FTSE 100 index are performing quite well amid heightened uncertainties.

Let’s through some light on the recent key developments in the above-mentioned FTSE 100 healthcare stocks:

AstraZeneca Plc (AZN)

The biopharmaceutical company, with a focus on discovery and development of products, reported its Q3 FY19 and YTD performance as on October 24, 2019. On a YTD basis, group's product sales grew by 17% on a constant currency basis to US$ 17,315 million, and by 13% on actual basis; collaboration revenue recorded a CER growth of 6% to US$ 405 million and in combination reported a total sales growth of 17% (on CER basis) to US$ 17,720 million against the comparable previous-year period. In the same period, its reported operating profit registered a CER growth of 3% to US$ 2,347 million; however, core operating profit surged by 42% on a CER basis to US$ 4,891 million. Reported Earnings per share plummeted 15% on a CER basis to US$ 0.79 during the YTD period; however, core EPS surged 38% on a CER basis to US$ 2.61.

In the third quarter of FY19, the group's total revenue surged by 22% on a CER basis to US$ 6,406 million, core operating profit leapt up by 41% on CER basis to US$ 1,880 million and Core Earnings Per Share surged 36% to the US $0.99. During the quarter under consideration, the group's therapy segment primarily Oncology reported sales growth of 46% on a reported basis, New CVRM recorded a growth of 8% and Respiratory sales grew by 15% respectively.

In the quarter under review, the group's Emerging Markets sales surged by 25% on an actual basis and 29% on a CER basis, primarily driven by 35% actual sales growth in China. US sales increased by 17% to US$ 2,025 million, European markets sales grew marginally by 1% on an actual basis, and Japan's sales surged by 31% on an actual basis against the year-ago period.

Price Performance

As on October 24, 2019, the company’s shares were quoting 244 points or 3.53% higher at GBX 7,163 and traded well above its short-term and long-term support levels of 50-days and 200-day simple moving average prices (SMA). In the year-over period, its shares have delivered a price return of approximately 16.6% and were up approximately 17.81% on a YTD basis. In the year-over period, its shares have registered a 52-week high of GBX 8,227.88 and a 52-week low of GBX 5,312.0 respectively.

GlaxoSmithKline Plc (GSK)

In the recent exchange filing made by the company as of October 21, 2019, the group reported that it has agreed to divest rabies and tick-borne encephalitis vaccines to Bavarian Nordic. The company will receive an upfront payment of approximately €301 million or £259 million. In addition, there will be milestone-based payments for a total consideration of up to £822 million.

GlaxoSmithKline Plc (GSK.L) is a healthcare company, which focuses on the development, manufacture and commercialisation of pharmaceuticals, vaccines and consumer healthcare products. It offers drugs for the treatment of HIV, respiratory diseases, cancer, immuno-inflammation, viral symptoms, central nervous system (CNS) related, metabolic, cardiovascular and urogenital, anti-bacterial, dermatological and rare diseases. The company offers over the counter (OTC) products for pain relief, oral health, nutrition, skin health and gastrointestinal disorders. Its area of operations categorised into three segments are Pharmaceuticals, Vaccines and Consumer Healthcare products.

During the second quarter of the FY19, the group’s total revenue stood at £7.8 billion and increased by 7 per cent (AER), while turnover increased by 6 per cent (AER) to £15.470 billion in H1 FY19. The company’s pharmaceuticals sales increased by 2 per cent (AER) to £4.3 billion, while on a CER basis, sales decreased by 1 per cent.  In Vaccines, sales surged by 26 per cent (AER) to £1.58 billion, while on a CER basis, sales increased by 23 per cent. In the Consumer Healthcare segment, sales stood at £1.9 bn. Total Group’s operating margin stood at 19 per cent.  Adjusted Group’s operating margin reduced by 1 per cent (AER) to 27.8 per cent. Total EPS increased to 19.5 pence, up >100% on AER as compared with the corresponding period of the last year.

In H1 FY19, total EPS increased by 80 per cent (AER) to 36.3 pence against the corresponding year-ago period. Adjusted EPS climbed to 60.6 pence in H1 FY19.

Price Performance

Shares of the GSK have delivered a price return of approximately 9.02% over the year-ago period and delivered around 12.84% on a YTD basis, respectively. Despite a decent surge in the stock price, the company’s dividend yield stood at 4.75% respectively. While writing (as on October 24, 2019, before the market close at 11:20 AM GMT), shares of the GSK were quoting 24.2 points or 1.35% higher at GBX 1,705.40, and in the past 52-weeks, its shares have registered a high of GBX 1,770.60 and a low of GBX 1,408.80.

Reckitt Benckiser Group Plc (RB.)

Recently, the globally renowned personal care group reported its trading update for the Q3 FY19. During the quarter under review the group's total revenue surged grew by 5.3% to £3,285 million on reported basis and up by 1.6% on a like-for-like basis, driven by 7.2% (LFL) growth recorded in the group's IFCN  segment, 4.5% (LFL) in Hygiene Home, offset by 0.3% (LFL) degrowth in Health segment and marginally offset by 6.8% (LFL) degrowth in the group's OTC segment. However on a YTD basis, the group's revenue increased by 2.9% (on a reported basis) to £9,525 million, led by 3.9% (LFL) growth in its IFCN segment, 3.3% (LFL) growth in the group's Hygiene Home segment partially offset by 0.6% (LFL) degrowth in Health segment and partially offset by 5.3% (LFL), degrowth recorded in the group's OTC segment, respectively.

However, full-year FY19 net revenue growth target plummeted to 0-2% (LFL), driven by a reduction in retail inventory levels of seasonal products during the third quarter of FY19 and uncertainties hovering over the season and associated stocking. Also, the group could witness a slight decline in the adjusted operating margin, as per the guidance provided in the statement.

Reckitt Benckiser Group Plc (RB.) is a consumer health and hygiene company that manufactures and markets household, toiletry and health care products. These consist of air fresheners, laundry products, dishwashing detergents, disinfectant sprays, water softeners, household cleaners, and personal care products. It also sells over the counter (OTC) drugs, cough and congestion tablets, sinus relief products, gastric liquids, hair removal and pest control products. The company markets these products under various Powerbands, including Nurofen, Strepsils, Mucinex, Dettol, Lysol, Veet, Harpic, Mortein, Finish, and Vanish.

Price Performance

In the year-over period, shares of the Reckitt Benckiser Group Plc have delivered a negative price return of 10.1% and declined approximately 2% on a YTD basis, respectively. At the time of writing on October 24, 2019 (before the market close at 11:20 AM GMT), shares of the RB were quoting at GBX 5,899 and plummeted 22 points or 0.37% against the previous traded price. In the year-over period, shares of the group have registered a 52-week high of GBX 6,796.34 and a 52-week low of GBX 5,510.0 respectively.

Also, among the FTSE 100 health care constituents, the RB has largely underperformed its peers and broader index as a whole. At the current trading level, its shares were hovering well below the short-term and long-term crucial support levels of 50-day and 200-day simple moving average prices. The MACD is also falling, with 12-day EMA quoting below the 26-day EMA.

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