Berenberg cuts GlaxoSmithKline stock rating to hold from buy

On Tuesday, Berenberg analysts downgraded GlaxoSmithKline (NYSE:GSK) stock from Buy to Hold, maintaining a price target of £16.00. The decision comes as GSK’s share price surged 25.94% year-to-date, marking it as the top performer in the pharmaceutical sector. According to InvestingPro analysis, the stock’s RSI indicates overbought territory, potentially supporting the analysts’ cautious stance.

Despite the strong performance, GlaxoSmithKline’s stock continues to trade approximately 30% below the value of its marketed drugs. InvestingPro analysis suggests the stock is currently undervalued, with a strong free cash flow yield of 9%. The analysts noted that a successful start to upcoming product rollouts could boost investor interest and mitigate concerns over the expiration of HIV patents in 2028 and beyond.

Berenberg analysts highlighted the potential for renewed investor interest if GlaxoSmithKline’s product launches exceed expectations. However, they anticipate that investors may adopt a cautious "show-me" approach before committing more heavily to the stock.

The analysts’ decision to downgrade the stock reflects a more conservative stance, suggesting that while the company has shown strong performance, future growth will depend on the success of its product launches and addressing long-term patent concerns.

In other recent news, GSK plc announced that the U.S. Food and Drug Administration has accepted the New Drug Application for linerixibat, an investigational treatment for cholestatic pruritus in patients with primary biliary cholangitis. The FDA decision is expected by March 24, 2026, based on positive results from the GLISTEN phase III trial. Meanwhile, Spero Therapeutics (NASDAQ:SPRO) and GSK reported positive phase 3 trial outcomes for tebipenem HBr, an oral antibiotic for complicated urinary tract infections. The trial met its primary endpoint, and the companies plan to file with the FDA in the second half of 2025. Additionally, GSK has acquired efimosfermin alfa, a treatment for steatotic liver disease, from Boston Pharmaceuticals for $1.2 billion upfront. The drug, in phase III trials, is anticipated to launch in 2029. Furthermore, the FDA has approved GSK’s Nucala for treating eosinophilic COPD, backed by successful phase III trials. These developments highlight GSK’s ongoing efforts in expanding its treatment portfolio across various therapeutic areas.

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