GSK shares (LON: GSK) are listed on the London Stock Exchange (LSE) and a key component of the FTSE 100 Index.
GSK, also known as GlaxoSmithKline, is a biopharmaceutical firm working on the development, production, and distribution of prescription medicines. The company focuses on various areas, including infectious diseases, HIV, respiratory/immunology, and oncology.
While GSK is headquartered in the UK, it has a significant research and development presence in over 60 countries globally. It also has a pipeline that comprises numerous projects.
GSK operates through various divisions and subsidiaries. It holds a 4.2% stake in Haleon, as well as a majority stake in ViiV Healthcare, while it owns Stiefel Laboratories.
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Pharmaceutical Industry Comparison
GSK EPS and Revenue Breakdown 2020-2023
| GSK | Annual EPS | Annual Revenue |
|---|---|---|
| 2020 | 115.9p | £34.01 billion |
| 2021 | 87.6p | £34.11 billion |
| 2022 | 139.7p | £29.30 billion |
| 2023 | 155.1p | £30.03 billion |
GSK, formerly known as GlaxoSmithKline, has its roots in a multitude of mergers, acquisitions, and expansions. Glaxo Wellcome and SmithKline Beecham, two of the world’s leading pharmaceutical and healthcare companies, merged in 2000 to form GSK.
The origin of GSK can be traced back to the establishment of Joseph Nathan and Company in New Zealand in 1873. This company was bought out by its subsidiary, Glaxo Laboratories, in 1947. On the other hand, the origins of SmithKline Beecham can be traced back to Philadelphia in 1830. These two companies, with their own rich histories and innovations, ultimately ended up with Glaxo Wellcome plc merging with SmithKline Beecham to form GlaxoSmithKline plc. In 2022, the company changed its name to GSK. Over the years, GSK has strategically acquired various companies and expanded its portfolio to become a leading player in the pharmaceutical and healthcare industries.
As mentioned, GSK is a prominent constituent of the FTSE 100 and is listed on the LSE. Additionally, it has a significant presence on the New York Stock Exchange (NYSE) through its American Depositary Receipts (ADRs).
GSK Share Price & Dividend Yield
GSK’s lack of share price growth over the last few years will have undoubtedly disappointed investors, with the stock bouncing between levels around 1,800p and 1,300p for several years (as of March 2024). It is currently pushing towards the higher end of the range, and the hope will be that a break higher can emerge at some point soon.
The GSK dividend is a staple, with a yield currently at a healthy 3.43%. Although many may be wondering why the GSK payout amounts have dropped slightly in recent years, you do want to see Pharma companies continue to invest in future product pipelines rather than merely satisfying shareholder demand for dividends in the short-term. The thought being that along with strong corporate fundamental growth, you would expect to see associated growth in the GlaxoSmithKline dividend yield over time.
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GSK Share Price Forecast
Analysts at Guggenheim recently became more bullish on shares of GSK, lifting their rating for the stock to Buy from Hold, with a 2,031p price target. The firm has increased trust in the company’s margin benefits which they believe indicates attractive upside potential in the stock. Furthermore, Guggenheim is positive on GSK’s commercial execution regarding the Arexvy and long-acting HIV portfolio launches.
Citi is also bullish on GSK, upgrading the stock’s rating to Buy from Neutral in a recent note. They also raised their target price for the company to 2,100p from 1,700p per share. The bank said GSK’s “compelling” DREAMM-7 data with belantamab mafodotin in myeloma “is the missing piece that pushes us over the line after the last seven years without a positive recommendation.”
Our View: GSK is a well-known and well-respected company in its field. It is a stock that, at the moment, does not provide much confidence in significant share price upside, but its stability, track record, and dividend payouts make it attractive for certain investors.
Suitability
When contemplating the purchase of GSK shares, various factors should be considered to determine whether they align with your investment objectives and risk tolerance. These factors can be essential in determining whether you should buy GSK shares and whether they will help you reach your investing goals.
GSK, like many pharmaceutical companies, operates in a volatile industry, which introduces inherent risks associated with drug development, clinical trials, and regulatory approvals. However, the company’s extensive and diversified product portfolio, coupled with its global presence, provides a degree of stability, making it potentially suitable for investors with a moderate tolerance.
GSK’s commitment to dividends and history of consistent payouts make it an appealing option for income-oriented investors. The company’s dividend yield and steadfast dividend policy can attract those seeking regular income from their investments, potentially making it suitable for income-focused portfolios.
For investors with a long-term growth outlook, GSK’s focus on innovation and its robust pipeline of drugs could present compelling growth prospects. The company’s strategic investments in research and development highlight its commitment to future growth, which may resonate with investors seeking long-term capital appreciation.
Moreover, GSK’s emphasis on developing drugs to address unmet medical needs, particularly in areas such as oncology, respiratory, and immunology, may appeal to ethical or impact investors who prioritise socially responsible investments. GSK’s dedication to addressing global health challenges could align with the values of socially conscious investors.
Once you have considered the factors above, it is crucial to acknowledge that the pharmaceutical industry is subject to stringent regulation, market competition, and the inherent risks associated with drug development. Therefore, potential investors need to have or build at least a small understanding of the industry they are investing in and the potential pitfalls.
