GSK PLC (LSE:GSK, NYSE:GSK) shares climbed 5% in early trading on Wednesday after the drugs giant appeared to shrug off vaccine-related woes and mollified the City by raising its long-term sales target.
It is now expecting revenue to exceed £40 billion by 2031, up from £38 billion previously.
The upgrade follows a strong 2024 performance, driven by specialty medicines, including treatments for HIV, oncology, and respiratory diseases.
Total sales rose 7% to £31.4 billion, with oncology sales nearly doubling. However, vaccine revenue declined 4%, mainly due to weaker demand for Arexvy, its RSV vaccine.
Despite a £1.8 billion charge linked to Zantac litigation, core operating profit - which excludes one-off costs - rose 11%, highlighting the strength of its key medicines.
Looking ahead, GSK expects 2025 revenue growth of 3% to 5% and core earnings per share to rise 6% to 8%. The company also announced a £2 billion share buyback over 18 months and an expected 64p dividend for the year.
According to Shore Capital, last year’s vaccine-related setbacks were disappointing, but they don’t fully justify how much GSK’s shares are trading below its competitors.
The brokerage notes that the stock is currently valued at around eight times its expected 2025 earnings, whereas a fairer value would be 2,100p per share, bringing it closer to 12 times expected earnings—a level more in line with its peers and past valuations.
In early trading, the shares were changing hands for 1,450.5p, up 70.5p.