GSK PLC (LSE:GSK, NYSE:GSK) has been reiterated as a 'buy' at broker Berenberg, which sees some of the ‘clouds of doubt’ that have plagued the pharma group’s summer starting to ease.
Zantac litigation in Delaware has been the main drag says the broker, but changes to US recommendations for Arexvy have also been a worry.
Against that, the sales growth has been solid with a 4% annual growth forecast up until 2030, but even with that GSK trades on the largest “regeneration gap” in the sector, notes the broker.
But with expectations set so low, now is the time to revisit GSK Berenberg argues.
HIV (Dovato, Cabenuva) and vaccines (Shingrix, Arexvy) have dominated GSK’s R&D profile since 2016, but these are still receiving upgrades.
In contrast, the current late-stage pipeline is dependent on success in respiratory, anti-infectives and oncology.
In 2024, Berenberg expects a return from the GSK pipeline of around 9% dominated by Blenrep (multiple myeloma) and depemokimab (severe asthma), which would be ahead of both the non-obesity peer group average (7%) and cost of capital (8%).
GSK continues to progress its HIV pipeline, with every-four-month dosing formulations of Apretude (prevention) and Cabenuva (treatment) moving into Phase 3 (P3)
Consensus forecasts are for a decline in GSK HIV sales from 2028 onwards, but Berenberg again believes that pipeline success could generate upside especially as it is still ahead in the larger injectable treatment segment.
Other pipeline catalysts include depemokimab in nasal polyps and Arexvy (third winter season), along with regulatory filings for Nucala in COPD and depemokimab in asthma.
Finally, Berenberg believes the Zantac litigation is in the price, with its target of 1,820p including an amount for possible settlements at £2.6 billion.
Shares today were down 0.7% at 1,660p.