GSK is in good shape even with the overhang of the Zantac litigation according to analysts at Berenberg.
Clear messaging on long-term targets and delivery in the interim is helping to build a more constructive dialogue with investors, says the bank.
Higher growth assets should drive a positive US rebate mix and as the contribution from legacy drugs (76% rebate ratio) fades, rebate pressure should ease.
Key catalysts this year according to Berenberg are phase III (P3) data readouts for depemokimab (asthma) and Arexvy (respiratory syncytial virus (RSV) vaccine, third season) in the second quarter and Nucala (chronic obstructive pulmonary disease) in the second half.
A ruling on Delaware State court expert witness hearings in the Zantac litigation should arrive in the second quarter, the bank adds.
On EV/NPV (including a £2.7bn Zantac liability), GSK trades at a 26% discount to global peers, a level that Berenberg sees as offering a compelling valuation, despite litigation risk.
Buy with a target price of 1,820p is Berenberg's conclusion.