Shares of British pharmaceutical giant GlaxoSmithKline (GB:GSK) gained 2.7% yesterday following a rating upgrade from research firm Jefferies based on attractive risk-reward potential. As part of its European pharmaceutical sector review, Jefferies analyst Peter Welford upgraded GSK stock to Buy from Hold. Further, the analyst raised his price target for GSK stock to 1,900p from 1,550p, implying 25% upside potential from current levels.
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Welford believes that considering the stock’s net present value (NPV), GSK is currently trading at a steep discount. The analyst’s estimates for GSK for Fiscal 2026 and beyond are way above the consensus expectations since he does not expect any major impact on profits due to the expiry of HIV patents in 2028. The analyst is encouraged by GSK’s solid pipeline of drugs in HIV injectables and vaccines, and new launches, which will continue to add to its performance.
Additionally, Welford attributed his bullish view on the stock to the potential out-of-court settlement of the Zantac lawsuit and “misplaced concerns” over 2024 growth. Overall, the analyst has a positive outlook on the European pharma sector in 2024 but expects certain headwinds like the absence of any big catalysts, U.S. political overhangs, and macro rotation.
Is GSK a Buy, Hold, or Sell?
On TipRanks, GSK stock has a Hold consensus rating based on four Buys, three Holds, and three Sell ratings. The GlaxoSmithKline share price forecast of 1,569.13p implies 3.3% upside potential from current levels. GSK shares have gained 9.2% in the past year.
GSK is expected to report its fourth quarter Fiscal 2023 results on January 31. Analysts expect GSK to post an adjusted profit of £0.31 per share on sales of £7.51 billion.
