Scan to Download ios&Android APP


GlaxoSmithKline (GSK) stock forecast: Is now the time to buy?


Updated

Share this article
In this article:
  • UK100
    UK 100
    7553.8 USD
    21.8 +0.290%

What You Need to Know

The week ahead update on major market events in your inbox every week. Subscribe
Munich, Bavaria / Germany - May 19, 2018: Headquarters of GlaxoSmithKline GmbH & Co. KG in Munich, Germany - GSK is a British pharmaceutical company
GlaxoSmithKline (GSK) stock forecast: Is now the time to buy? – Photo: Shutterstock

UK-based healthcare company GlaxoSmithKline (GSK) has seen its share price rise by close to 12% year-to-date, as the company has also rejected three unsolicited offers from consumer goods company Unilever (ULVR) for its consumer healthcare business.

The pharma giant recently confirmed its intention to spin off the business into a new company called Haleon, which began trading on the London Stock Exchange (LSE) on 18 July 2022.

So, is GlaxoSmithKline a buy, hold or sell right now? 

In this article, we look at the company’s recent announcements, share price performance and the potential long-term outlook for the stock.

GSK settles Gilead dispute, rejects Unilever offer 

GSK has three main divisions – pharmaceuticals, vaccines and consumer healthcare. The company’s majority-owned ViiV Healthcare subsidiary, a specialist HIV company, settled the case against Gilead Sciences (GILD) concerning its patents relating to dolutegravir, which is used with other medicines to treat HIV. US-based Pfizer (PFE) and Japanese pharmaceutical company Shionogi & Co (4507) are also shareholders in ViiV Healthcare. 

As part of the settlement, GSK, Shionogi and Gilead have negotiated a patent licence agreement under which Gilead has a worldwide licence to use “certain ViiV Healthcare patents relating to dolutegravir”. Gilead will make the $1.25bn payment in the first quarter of 2022, and will also pay a 3% royalty on the future US sales of its Biktarvy treatment.

On 1 February, GSK announced that the United States Food and Drug Administration (FDA) has approved its Cabenuva complete long-acting HIV injectable treatment regimen for use every two months. The FDA approved the treatment for monthly use in January 2021.

The GSK share price rose to £16.49 on 2 February, up from £16.43 on 31 January. The stock had climbed to £17.08 on 17 January, after the company announced on 15 January that it had rejected Unilever’s offers.


Unilever’s most recent offer for the consumer healthcare business was received on 20 December 2021 – £41.7bn in cash and £8.2bn in shares, for a total of £50bn. The business is a joint venture with Pfizer, in which GSK holds a majority 68% stake, while Pfizer owns 32%.

GSK said that “all three proposals were made on the basis that they fundamentally undervalued the Consumer Healthcare business and its future prospects”, citing “increasing household penetration of its leading brands and capitalising on new and emerging growth opportunities arising from innovation and the use of new technologies and digital platforms, all underpinned by continued strong execution and financial discipline”. 

Over the medium term, GSK expects increased revenue from oral care, vitamins, minerals and supplements (VMS), and pain relief; increasing innovation in the US and China; and extended growth in emerging markets to continue driving sales higher.

What is your sentiment on GSKl?

14.010
Bullish
or
Bearish
Vote to see Traders sentiment!

GSK spins off consumer healthcare business 

GSK spun its consumer healthcare business into a new company, Haleon, with the shares debuting on the LSE at 330p on 18 July 2022. 

GSK previously stated it expected the new firm to be a “world leader” in consumer healthcare, offering the prospect of attractive organic sales growth, operating margin expansion, and consistent high cash generation.

Products in Haleon’s portfolio include leading brands such as Sensodyne, Voltaren, Panadol and Centrum.

As of 18 July, the GSK share price was yet to fully recover from the collapse in share prices at the beginning of the Covid-19 pandemic in March 2020. The stock traded up to £18.46 in January 2020 – its highest level since November 2001. It then fell to £14.03 in March 2020, and while it bounced to £16.88 in April 2020, it subsequently declined to £11.91 in February 2021.

5-year GSK share price chart

When did GlaxoSmithKline split?

The split was completed on 18 July and Haleon shares admitted to the LSE main market. It was originally approved at GSK’s annual general meeting (AGM) on 6 July.

Following the demerger, Haleon’s total issued ordinary share capital means that GSK shareholders jointly own 54.5%, of the business. Pfizer will continue to hold 32%, GSK will hold 6%, and 7.5% will be held by Scottish limited partnerships that provide funding to GSK pensions.

Pfizer is expected to reduce its stake in Haleon following the company’s initial public offering (IPO) and the lock-up period.

GlaxoSmithKline share price forecast: How do analysts view the stock?

As of 18 July 2022, the average GlaxoSmithKline share price forecast from nine analysts that have issued a rating was £17.83, ranging between a low of £15 and a high of £21, according to MarketBeat. There were three buy ratings, five hold recommendations, and one sell.

Laura Hoy, equity analyst at Hargreaves Lansdown, wrote in a recent note: “Things are ticking over nicely at GlaxoSmithKline as the group gears up to separate its Consumer Healthcare business. This arm of the business garnered a lot of attention when Unilever expressed an interest in buying it, but there’s been no word of another potential suitor.”

Hoy added: “However, last year’s results show the (healthcare) business benefits from a degree of operating leverage – despite sales being flat for the year, the business saw profits rise 9%. This will be a welcome tailwind when the business gets the boot as a chunk of its cashflow will be used to pay off the mountain of debt it’ll be packed off with.”

On 5 January, Deutsche Bank reiterated its hold rating with a GSK share price prediction of £13.50, the most bearish forecast, while on 7 January, Goldman Sachs issued the most bullish price target of £20.

On 2 February, Jefferies Financial Group issued a GSK stock forecast setting a price target at £19.25 a share, while JP Morgan Chase set a GSK stock price target of £17.10.

18 February saw HSBC analyst Steve McGarry reiterate a ‘buy’ rating on the stock while raising the price target to £21.70 from £20.00 ahead of the planned Consumer Health spin-off in mid-2022.

On 21 April, Morgan Stanley analyst Mark Purcell raised the price target on GSK to £17.90 (from £17.50) while maintaining a ‘hold’ rating.

As of 18 July 2022, algorithm-based forecast site Wallet Investor was positive on the short-term outlook but bearish in its long-term GSK stock analysis. It predicted that the share price could fall to £16.99 by the end of 2022. Over the long-term, the GSK price could rise slightly to £17.08 by the end of 2023, £17.32 in December 2025 and £18.07 by July 2027. 

When looking at price forecasts, you should remember that analysts and algorithm-based forecasters can and do get their predictions wrong.

We recommend that you always do your own research before making any investment decisions and remember that past performance is no guarantee of future returns. You should never invest money that you cannot afford to lose.

FAQs

Will GSK stock go up or down?

As of 18 July 2022, the outlook for the GSK share price was mixed, with some analysts predicting that the stock could gain value over the next year, while others expected it to fall. 

Keep in mind that forecasters can and do get their predictions wrong. You should do your own research to make informed trading decisions. Keep in mind that past performance is no guarantee of future returns.

Is GSK stock buy, sell or hold?

Whether GSK is a buy, hold or sell for your portfolio depends on your investing goals and timeframe, among other factors. You should do your own research into the company’s performance and evaluate the level of risk you are prepared to accept before investing.

Further reading:

 

What You Need to Know

The week ahead update on major market events in your inbox every week. Subscribe
The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
Capital Com is an execution-only service provider. The material provided on this website is for information purposes only and should not be understood as an investment advice. Any opinion that may be provided on this page does not constitute a recommendation by Capital Com or its agents. We do not make any representations or warranty on the accuracy or completeness of the information that is provided on this page. If you rely on the information on this page then you do so entirely on your own risk.

Still looking for a broker you can trust?


Join the 427.000+ traders worldwide that chose to trade with Capital.com

1. Create & verify your account

2. Make your first deposit

3. You’re all set. Start trading