Can GSK Shares Maintain Recent Momentum?

GSK's shares (LON: GSK) have gained 8.96% year-to-date, after an impressive earnings report helped the stock to a 7.6% gain in yesterday's session. However, with the share price hitting 52 week lows as recently as three weeks ago, is this a false dawn akin to a dead cat bounce, or the beginning of a bullish trend?

Operationally, the company is making steady improvements, with 2024 total sales rising by 8% to £31.4 billion. There has been particularly significant growth seen in its Speciality Medicines sector, which grew by 19%. Furthermore, the company's core operating profit increased by 11% to £9.1 billion, and the core earnings per share (EPS) saw a 10% rise, reaching 159.3p.

GSK also announced a fourth-quarter dividend of 16p, bringing the full-year dividend to 61p. Additionally, the company is set to undertake a £2 billion share buyback program over the next 18 months, indicating a strong position of financial health.

Looking forward, CEO Emma Walmsley expressed optimism for the company's growth, projecting profitable returns in 2025 and an upward revision of expected turnover, predicting sales will exceed £40 billion by 2031. GSK plans to bolster investment in research and development, primarily focusing on new, long-acting, and speciality medicines. The updated guidance for 2025 anticipates turnover growth between 3-5% and core operating profit growth of 6-8%.

Despite these optimistic projections, GSK has faced challenges, including a £2.2 billion settlement related to Zantac lawsuits, and lingering concerns following its demerger from Haleon, which previously caused investor hesitance.

Analysts targets remain largely to the upside, with the consensus just under 1,800p more than 20% away. The low mark of 1,190p reflects the bears seeing things quite differently, and with GSK shares having lost 10% over the past 12 months there will need to be a continued shift in order for the move to be sustained. Yesterday's move was supported with heavy volume, as 14.17million shares changed hands, significantly higher than the ADV of 7.94million. As the market opens today with the stock up a further 1% at 1,500p, a further delve into the fundamentals may be worthwhile.