GlaxoSmithKline shares rally and buck the FTSE trend

GlaxoSmithKline shares rally and buck the FTSE trend

GlaxoSmithKline (LON:GSK) continues to rally and avoid the more bleak fate being faced by some of its FTSE 100 counterparts.

GSK’s share price has progressed in its usual manner, with an incremental rise of 0.16 percent since trading opened this morning; the price going from 1505.2-1513.6 GBX in the first five minutes of trading.

This is impressive, not only because of the current climate of the global market, but because the company is suffering from a series of patent expirations, which have prompted analysts to label the stock as overvalued in fundamental terms.

However, what makes this stock so appealing are its standardised dividends and projected profits. Over the last five years, the only fluctuation in GSK’s dividends was 2 GBX in 2013, with a trend of 80 GSX per share – a yield of 5 percent per annum – over the last four years.

Further, estimates from analysts are bullish. GSK are predicted to see an earnings growth of 15.9 percent per year, with an earnings increase of 0.212-0.959 GBP over the next three years. In the short-term, at least, such projections don’t seem outlandish. With recent success in the phase three trial of its two-drug HIV treatment and spiked demand in the US market for Shingrix, GSK’s shingles vaccine, profits in the near future look promising. It is quite possible that such profits will be bolstered, should GSK choose to sell off GSK Consumer Healthcare, with an estimated valuation of over 4 billion USD and Coke, Nestle and Danone all in the running.

It would be foolhardy to label GSK a safe stock, but it is currently one of the FTSE 100’s success stories. Only time will tell whether selling off GSKCH will inhibit their ability to reach their targets, or whether their dividends are sustainable.