The pharma company is celebrating its 20th birthday in December and the broker said it is about to enter its twenties with a new management team, fewer product headwinds, and innovative growth drivers in the oncology and vaccine franchises after a challenging decade.
The target price was cut to 1,730p from 1,840p, though the firm is estimated to deliver around 5% growth annually.
The patent of HIV/AIDS treatment Dolutegravir expires in 2027 and is potentially a major earnings headwind, according to analysts, but the profitable oncology franchise can offset most of this erosion and protect margins.
The division has two potential blockbusters on the market, Zejula and Blenrep, while the total franchise sales could reach £4bn by the end of the decade.
Liberum said the performance in the vaccines business has been impressive thanks to shingles jab Shingrix, which “still has plenty of growth ahead”, aided by new supply coming on-stream in 2024.
Moreover, the joint venture with Pfizer is rolling out long-acting injections, such as Cabenuva, to control HIV, “which could be a game-changing approach for a significant number of patients”, analysts said.
“GSK has maintained an 80p dividend since 2017, despite years where operating cashflow couldn’t fund the payment,” the broker said.
“The weakness of Sterling helped GSK’s cause in 2016 but dividend cover remains tight. We expect cover to improve from 2022, although this could be delayed if progress on Brexit deals allows sterling to strengthen again.”
Shares rose 1% to 1,310.14p on Monday morning.