GSK Zantac settlement removes overhang, but concerns remain, says BofA

After GSK announced it has reached an agreement to resolve 93% of its Zantac state court product liability cases for up to $2.2B, BofA says this leaves just 6,000 cases remaining and removes an overhang. The settlement amount is “significantly lower” than the $8B worst-case scenario the firm had seen post the Delaware Daubert decision and equivalent to only about 3% of market cap, so it is a “positive outcome” that is likely to largely remove Zantac risk from the share price. However, even after removal of Zantac litigation, BofA continues to see key risk to consensus numbers from Arexvy and Shingrix and sees GSK’s longer-term growth as challenged, so it maintains an Underperform rating on the shares.