- A core-satellite portfolio splits investments into stable core holdings and higher-risk satellite picks.
- The core is usually 60% of the portfolio, with satellites at 40%.
- It blends passive index investing with active opportunity bets.
Two of the UK's biggest drugmakers reported better-than-expected first-quarter profits Wednesday morning, only to see both stocks fall by midday. The disconnect points to one thing - Trump's drug pricing fight.
The earnings beats were real, but the market is trading the next 18 months instead of the last 90 days.
AstraZeneca's core earnings per share - profit per share of stock - hit $2.58, ahead of the $2.53 Wall Street expected. Revenue rose 8% from a year ago to $15.3 billion, with oncology sales up 16%.
CEO Pascal Soriot, who has run the company since 2012, called the period "catalyst-rich" and said AZ is on track for $80 billion in revenue by 2030. The company reaffirmed its full-year outlook of mid-to-high single-digit revenue growth and core EPS in the low double digits.
GSK delivered too, with core EPS of £0.47 ($0.63) topping the £0.43 estimate and revenue rising 5% to £7.63 billion. The company reaffirmed its 2026 guidance of 7% to 9% core earnings growth and pointed at a £40 billion sales target by 2031.
Citi called AstraZeneca "the fastest growth and best pipeline in the sector," with 11 late-stage clinical trial readouts still coming this year.
Drug pricing in the US is what investors are now watching. Trump's most-favored-nation policy, or MFN, would tie US drug prices to lower prices in other countries.
The CEOs of Novartis, AstraZeneca, Roche and Boehringer Ingelheim have all warned that European drug launches could shrink if the policy lands as written. Novartis CEO Vas Narasimhan said the "reality of MFN" hasn't kicked in yet but will start hitting in the next 18 months.
GSK CEO Luke Miels, who took over in January, said the company has not changed its launch plans yet. "There's no immediate change to our launch sequence or our portfolio decisions based on what we know today," Miels said.
GSK still has a 2028 problem, and that's when its top-selling HIV drug, dolutegravir, loses patent protection. Citi noted that much of GSK's earnings beat came from one-off legal charges, not core operations.
Shingrix vaccine sales rose 20%, but general medicines pulled the other way, leaving the underlying business mixed. Miels has signaled GSK will look to dealmaking to plug the dolutegravir hole.
AstraZeneca's pipeline reads better, with April delivering a positive late-stage trial for a cancer drug combo and late March bringing a surprise lung disease win after rivals failed.
Over the past 12 months, GSK is up 42% and AZ is up 30%, while the Stoxx 600 is up 15% and the FTSE 100 is up 22%. That gap is built on pipeline momentum, and the next 18 months of MFN clarity will test whether either stock can keep it.
Whether Trump's MFN policy gets enforced and how it gets priced into 2027 forecasts. Whether GSK can replace its dolutegravir revenue and whether AZ's 11 trial readouts can keep stretching its lead.
The earnings beats happened. The price tag of the next 18 months is what's actually trading.
