GSK may have numbers may have been flattered by order timing, says bank

GSK reported strong second-quarter results, exceeding expectations on sales, profits, and EPS, and subsequently raised its full-year guidance to the top end of its previous range, primarily driven by robust HIV and vaccine sales. However, UBS analysts caution that much of this outperformance was due to temporary timing effects, such as early orders and stock builds, which are expected to reverse in the second half. This, combined with anticipated currency headwinds, a reversal of Q2's cost savings, and pipeline delays like the CALM-2 trial pushed to late 2026, suggests the headline strength may be tempered by underlying challenges despite the 1.5% share price increase.

Analysis

GSK PLC reported a strong second quarter, with sales, profits, and earnings per share surpassing consensus expectations, prompting the company to raise its full-year 2025 guidance to the upper end of its prior range. The positive performance was primarily driven by outperformance in its HIV and vaccines segments, which offset a slight lag in general medicines. Despite the headline beat and a 1.5% rise in the share price to 1,417.5p, a deeper look reveals potential headwinds. UBS analysts highlight that the Q2 strength was materially flattered by temporary factors, including the early timing of HIV medicine orders and Shingrix vaccine stock-building in France, which are expected to reverse in the latter half of the year. Furthermore, the quarter benefited from lower selling and administrative costs, a dynamic GSK expects will also reverse as spending increases for new product launches. The guidance uplift is also less impactful than it appears, as consensus estimates were already near the new, higher targets. Looking forward, the company faces anticipated currency headwinds, a delay in its CALM-2 trial for chronic cough until late 2026, and uncertainty around its Blenrep asset following a negative FDA opinion, collectively suggesting underlying challenges that temper the strong quarterly results.

Key Decisions for Investors

• Investors should be cautious about extrapolating the strong Q2 performance, as the positive impact from order timing and lower administrative spending is expected to reverse in the second half.
• Monitor the R&D pipeline closely for any further news, particularly regarding the delayed CALM-2 trial and the regulatory path for Blenrep, as these are critical for long-term growth and currently represent significant uncertainties.
• Consider that the raised guidance was largely anticipated by the market, and factor in the expected margin pressure from increased H2 spending and the negative impact of currency headwinds on reported results.