GlaxoSmithKline plc (LON:GSK) could receive a further Brexit boost if Prime Minister Theresa May takes a hard-line approach to the UK’s disengagement from the European Union.
That at least is the opinion of the respected pharma team at Jefferies, which raised its valuation of shares Europe’s largest drugs firm.
It thinks the stock is worth 1,735.5p, up from 1,585.5p. The former figure is around 9% higher than the current share price. The broker rates GSK ‘buy’.
The impact of Britain leaving the EU has resulted in a major foreign exchange rate gains for exporters such as Glaxo as the pound has weakened against international currencies.
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In a note to clients, Jefferies said: “With the UK government expected to trigger Article 50 by April, a hard Brexit looks increasingly likely, driving further potential in Sterling.
“GlaxoSmithKline has already seen a benefit from Sterling weakness in 2016 and could benefit from further declines against the US dollar in particular.”
At 12.15pm, the shares were changing hands for 1,595p (up 9.5p). Of the 16 analysts logged as following GSK, half are ‘buyers’ of the stock, while only two have ‘sell’ recommendations.
The remainder thinks the company is fully valued.
Reflecting this positivity the consensus price target has been hiked over the last six months to 1,730p a share from 1,600p.