Can GlaxoSmithKline Break Higher?

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With shares of GlaxoSmithKline (NYSE:GSK) trading around $53, is GSK an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

GlaxoSmithKline is global healthcare group engaged in the discovery, development, manufacturing, and marketing of pharmaceutical products. These products are vaccines, over-the-counter medicines, and health-related consumer products. GlaxoSmithKline’s principal pharmaceutical products are medicines in these areas: respiratory, antivirals, central nervous system, cardiovascular and urogenital, metabolic, antibacterials, oncology and emesis, dermatology, rare diseases, immuno-inflammation, vaccines, and HIV.

GlaxoSmithKline said sales in China, where the company is facing a bribery probe, have improved since the third quarter, when drug revenue plunged 61 percent from a year earlier. “The trend is definitely looking a bit more positive” since the quarter ended September 30, Chief Financial Officer Simon Dingemans said in an interview in San Francisco at JPMorgan Chase & Co.’s (NYSE:JPM) healthcare conference. “We can see the future opportunities to rebuild the business as and when we get to the other side of the inquiry. We’ll be working hard in 2014 to deliver that.” Allegations by China’s government that Glaxo bribed hospitals, doctors, and officials drove sales to some competitors with similar products, Chief Executive Officer Andrew Witty said in October. The London-based company has conducted a review of its operations in other emerging markets and implemented additional anti-bribery controls and measures in higher-risk countries, Dingemans said. “So far, we see this situation confined to China,” he said.

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