HSBC analyst Rajesh Kumar has revised down the price target for GSK (GSK, Financial) to 1,170 GBp, a slight reduction from the previous target of 1,190 GBp, while maintaining a Reduce rating on the shares. This adjustment comes as a reaction to a mix of challenges that could potentially impact the company’s earnings.
The introduction of new U.S. tariffs, along with a significant patent cliff and the implications of the Part D/Inflation Reduction Act, are anticipated to exert pressure on GSK's (GSK, Financial) biopharma earnings. According to HSBC’s analysis, the sector could experience earnings headwinds ranging from 6% to 14% if a 25% U.S. tariff is implemented.
Further examination has prompted concerns over potential risks to earnings, which may also be influenced by factors such as tax rates, depending on how these tariffs are structured. The analyst has shared these insights with investors, highlighting the need for careful consideration of accounts and supply chains.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 7 analysts, the average target price for GSK PLC (GSK, Financial) is $39.38 with a high estimate of $45.00 and a low estimate of $35.13. The average target implies an upside of 5.20% from the current price of $37.43. More detailed estimate data can be found on the GSK PLC (GSK) Forecast page.
Based on the consensus recommendation from 9 brokerage firms, GSK PLC's (GSK, Financial) average brokerage recommendation is currently 2.8, indicating "Hold" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for GSK PLC (GSK, Financial) in one year is $43.39, suggesting a upside of 15.92% from the current price of $37.43. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the GSK PLC (GSK) Summary page.
GSK Key Business Developments
Release Date: February 05, 2025
- Sales Growth: Increased by 8% to over GBP31 billion.
- Core Operating Profit: Up 13%.
- Core EPS: Increased by 12%.
- Dividend: Increased to 61p per share.
- Specialty Medicines Growth: Up 19% in 2024.
- Oncology Sales: Nearly doubled to more than GBP1.4 billion.
- HIV Sales Growth: Up 13% for the full year.
- Vaccine Sales: GBP9 billion, down 3%.
- Free Cash Flow: Improved to GBP3.5 billion, excluding Zantac payments.
- Net Debt: Reduced to GBP13 billion.
- Share Buyback Program: Announced up to GBP2 billion over the next 18 months.
- 2025 Sales Growth Guidance: Expected to increase between 3% and 5%.
- 2025 Core Operating Profit and EPS Guidance: Expected to increase between 6% and 8%.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- GSK PLC (GSK, Financial) reported an 8% increase in sales for 2024, reaching over GBP31 billion, driven by strong growth in specialty medicines.
- Core operating profit rose by 13% and core EPS increased by 12%, leading to two upgrades in guidance for 2024.
- The company announced a dividend increase to 61p per share and plans to pay 64p in 2025, reflecting strong financial performance.
- GSK PLC (GSK) expects five new product approvals in 2025, including BLENREP for multiple myeloma and depomokimab for severe asthma.
- The company achieved 13 positive Phase III readouts in 2024, strengthening its R&D pipeline, particularly in oncology and respiratory immunology.
Negative Points
- Vaccine sales faced challenges due to external pressures in the U.S. and China, impacting Arexvy and Shingrix.
- The introduction of the Inflation Reduction Act is expected to have a GBP150 million to GBP200 million impact on HIV sales in 2025.
- GSK PLC (GSK) adjusted its expectations for vaccine sales growth, anticipating a decrease in low single-digit percent in 2025.
- The company faces pricing and genericization pressures in its General Medicines portfolio, expecting sales to be broadly flat in 2025.
- There is significant speculation and potential changes to U.S. vaccine policy, contributing to short-term pressures on the vaccine market.
