GSK growing optimistic on HIV but long term challenges remain - analyst
Proactive Investors
Published Jan 11, 2023 11:58
Updated Jan 11, 2023 13:11
GSK growing optimistic on HIV but long term challenges remain - analyst
Proactive Investors - GSK PLC (LON:GSK) is growing at a "robust" rate and showing increasing confidence in its HIV treatments, according to Jefferies analysts, though they cut their share price target due to long-term challenges and cost worries.
Jefferies kept its 'hold' rating and suggested a 2022 price target of 1,575p, a 4% drop on original targets, but this still sits above its current price of 1,415p.
A lower target is based on higher costs from the end of 2022, Jefferies outlined, including to boost “commercial opportunity” from a series of vaccine launches, and an estimated charge of £50mln to £60mln when it redeemed £1.6bn worth of bonds in mid-November.
“GSK offers robust double-digit earnings growth until 2028,” but longer-term fundamental challenges “keep us on the sidelines at a hold rating,” analysts added.
Setbacks in oncology and the potential need for new licences and bolt-on acquisitions remain, Jefferies said, including due from the upcoming expiry of its HIV patents.
Jefferies forecast GSK’s sales to be up 5% year on year, though, while pre-tax earnings should have grown by over 10% too when it reports full-year results on 1 February.
Following an event held by chief executive Emma Walmsley on Tuesday, Jefferies said: “GSK’s confidence is clearly growing that pipeline ultra-long acting forms or self-administration has the potential to rapidly shift the (existing) treatment paradigm.”
Walmsley outlined that two-thirds of the firm’s development portfolio comes from infectious disease and HIV treatment while speaking on Tuesday, suggesting these offered an “attractive growing market," worth over £100bn per year.
These treatments also accounted for 50% of GSK’s sales in the first nine months of 2022, the CEO added.
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