Crunch time for GSK on Wednesday; Berkeley to report on London housing exodus

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Wednesday is likely to see all eyes on GlaxoSmithKline as the firm kicks off its eagerly anticipated investor day at the mid-point of the week.

Meanwhile, final results from housebuilder Berkeley will provide some more action in the diary, with flash PMIs from the US and the UK providing some macro flavour.

GSK investors to eye outlook and pipeline in update

Wednesday is due to see an update from pharma giant GlaxoSmithKline (LON:GSK), with boss Emma Walmsley likely aiming to soothe some nerves about the company’s outlook in a bid to fend of agitations for change from US activist investor Elliott.

Walmsley may not have expected pressure from an activist shareholder given her spearheading of a major shift in GSK’s strategy over her four years at the helm, particularly the company’s planned demerger of its consumer healthcare business which is likely to be a key point of interest in the update.

READ: GlaxoSmithKline share price surge keeps Emma Walmsley’s head above water, but for how long?

According to a first-quarter update in May, Wednesday’s update will include more info on the demerger as well as details on the company’s overall strategy, its capital allocation plans and its growth outlooks from 2022 to 2031.

Also in focus will be the company’s drug development pipeline, where GSK is hoping to recover following a series of setbacks. A key interest in this area will be the firm’s COVID-19 vaccine, which it is aiming to bring to market by the end of this year.

Flat profits for Berkeley?

The last update from FTSE 100 housebuilder Berkeley Group Holdings PLC (LON:BKG) in March was rather flat, with profits expected to level off in 2021 and 2022 amid volatile trading.

Demand was strong where it has had stock, the Surrey-headquartered group said, but some new developments and phases have been put on hold until the economy opens up post-lockdown.

Still, flat profits will be good enough to underpin Berkeley’s ongoing commitment to returning £280mln of cash a year to shareholders through dividends or buybacks, it said.

Shares in the London-centric company have also been flat this year, underperforming the wider sector, with analysts at JP Morgan recently saying worries about cladding and the pandemic-led ‘de-urbanisation’ exodus from the capital were both being overplayed.

Wednesday’s full-year results should see the numbers come in well ahead of the peer group and the bottom-end of guidance, JP Morgan predicted, with a healthy balance sheet driving another commitment to capital returns.

Increases in the cost of construction materials and shortage of skilled labour have also created another hurdle for the housebuilding industry, among many.

While Berkeley’s relatively high price point and specialism in complex sites mean materials account for a smaller proportion of the overall cost base, as analysts at Hargreaves Lansdown said, it’s something to keep an eye on.

Significant announcements for Wednesday June 23:

Trading announcements: GlaxoSmithKline PLC (LON:GSK), Joules Group PLC (LON:JOUL)

Finals: Berkeley Group Holdings PLC (LON:BKG), Liontrust Asset Management PLC (LON:LIO), Manolete Partners PLC (LON:MANO)

Interims: Crest Nicholson Holdings PLC (LON:CRST)

Economic data: UK flash PMIs, US flash PMIs

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