- Pre-Market Indications

Tuesday, May 27, 2008

Opening View: GlaxoSmithKline and Novartis AG in the Pharmaceutical Spotlight

After a long holiday weekend, U.S. stock futures are trading lower heading into the open, indicative of a potentially negative start to regular session. Overseas trading is mixed this morning, after Asian markets surged higher but European markets found themselves in the red. In focus this morning are earnings and management news from Vodafone Group, brokerage news for General Electric, and GlaxoSmithKline and Novartis AG in the pharmaceutical limelight.

Vodafone Group (VOD: View sentiment for VODsentiment, chart, options) was making headlines this morning after reporting a profit of 6.66 billion pounds ($13.2 billion), with revenue jumping 14% higher to 35.48 billion pounds. Analysts, on average, expected a profit of 6.26 billion pounds on revenue of 35.32 billion pounds. Meanwhile, the firm announced its CEO, Arun Sarin, will step down in July after 5 years of service, with his position slated to be filled by Deputy CEO Vittorio Colao.

Turning to pharmaceuticals in focus, GlaxoSmithKline (GSK: View sentiment for GSKsentiment, chart, options) is set to open modestly lower after Morgan Stanley downgraded the drug maker to "underweight" from "equal weight." The broker attributed the cut to "significant risk to Street expectations for U.S. Cervarix approval in 2009." More specifically, the analyst cautioned that the Food and Drug Administration (FDA) requires evidence of a benefit for Cervarix versus rival Gardasil, produced by Merck (MRK).

In other drug-related news, shares of Novartis AG (NVS: View sentiment for NVSsentiment, chart, options) are set to open fractionally higher after reporting the European Commission gave clearance to market Extavia, an injection treating early and relapsing forms of multiple sclerosis. NVS has also filed for clearance with the FDA. In a statement, the drug maker said it hopes to launch Extavia in both the U.S. and the E.U. in the first half of 2009.

Checking in on blue chips, General Electric (GE: View sentiment for GEsentiment, chart, options) returned from a long weekend only to be greeted with a price-target cut from Deutsche Bank. More specifically, the broker cut GE's 12-month target to $33 from $35, reiterating its "hold" rating. The analyst forecast 2009 earnings will be hurt by rising tax and loss provision rates with GE Capital, on top of potential dilution from portfolio realignment.

Opening View: GlaxoSmithKline and Novartis AG in the Pharmaceutical Spotlight

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