JP Morgan Update: Are Wall Street Analysts underestimating GSK?

At the JP Morgan Healthcare Conference today, Dr JP Garnier, CEO of GlaxoSmithKline (NYSE:GSK) commented that Wall Street Analysts may be underestimating GSK stock for the following three reasons:

1. The revenue impact of Advair patent loss in 2011 may not be as dramatic as forecasted. Since Advair has a distinct patented device, generics will not be AB rated and pharmacists will not be able to substitute physician’s prescriptions.

2. GSK has 25 products ready for launch in the 2008-10 time period, a clear booster for revenue growth.

3. Merck and Co’s Gardisil- for which GSK receives royalties, was understimated. So is GSK’s own Cervarix, which has been approved in 45 countries, and should clear the FDA review once they have fully digested the 30,000 patient database. Additionally, the medical need for the prevention of cervical cancer should drive market expansion.

Alltogether, the post 2011 cliff may be exagerated driving a low P/E of 14 for GSK.