Deutsche Bank Markets Research Rating Hold Europe United Kingdom Pharmaceuticals Pharmaceuticals Company GlaxoSmithKline 08.1L GSK LN EN:mango r:cto/ LSE GSK Updating for margin reset/dilution - smooth execution now critical ineentol eecre Fats out cfedrble !date:. nbvi all about e>ecuhon GSK's 1O results were all but overshadowed by its decision to forgo the planned f4bn B share scheme in return for a longer term commitment to a maintained dividend. Although we view management's long-term targets as achievable/beatable and consistent with our own previous assumptions, a further reset to margin expectations leaves the company more reliant on its accelerated cost savings programme. With question marks remaining over execution and the u-turn over capital allocationNiiV IPO plans bruising credibility with investors, we retain our Hold rating. Reducing 2015.2019E EF'S forecasts by 6-10,:1:; CAGR little changed We have revised our forecasts to reflect dilution from the cancelled B share scheme and a further reset in margins, partly offset by GSK's accelerated E3bn cost saving and synergies programme. This reduces our Core EPS forecasts by 11% in 2015 and 7.8% thereafter. Our "return to growth" assumptions are little changed with a 2015-19E EPS CAGR of 7.6% (from 7.1%) albeit from a significantly lower base. investor confidence in execution and R&D event key to share performance The assumptions set out in our report "Is ViiV the key to a return to growth?" (April 2015) are little changed. These reassure us that a strong contribution from ViiV, along with improving margins within Vaccine and Consumer will drive GSK's return to solid growth even with pressures on its respiratory business. However, with our forecasts now reliant on accelerated materialisation of cost savings/synergies, we expect investors to look for solid evidence of an improvement in execution before rewarding the shares with additional value. We remain skeptical the