EU and US could reach trade deal this weekend - Reuters
On Wednesday, BNP Paribas (OTC:BNPQY) Exane initiated coverage on shares of GlaxoSmithKline (NYSE:GSK:LN) (NYSE: GSK) with a Neutral rating and a price target of £13.50. The firm’s analyst, Peter Verdult, provided insights into the decision, citing a valuation based on discounted cash flow methods. With a market capitalization of $71.7 billion and a "GOOD" Financial Health score according to InvestingPro, GSK maintains a strong position in the pharmaceutical sector. Verdult acknowledged GlaxoSmithKline’s current low multiple and noted that their forecasts for the years 2025 to 2030 are more optimistic than the consensus.
Despite the positive outlook on some financial forecasts, Verdult expressed caution due to potential challenges that GlaxoSmithKline may face. He mentioned the loss of exclusivity (LOE) for certain HIV and respiratory products and described the company’s pipeline expectations as modest. The company’s strong fundamentals, including a 71.8% gross profit margin and a 25-year track record of consistent dividend payments, currently yielding 4.5%, provide some stability amid these concerns. Verdult also pointed to the rising regulatory risks in the United States, which could affect GlaxoSmithKline, particularly with regard to Medicaid HIV funding concerns and possible regulatory delays for the company’s drugs depe, Nucala, and Blenrep.
In addition to these concerns, Verdult referenced a survey conducted among community-based oncologists focusing on GlaxoSmithKline’s Blenrep, a treatment for myeloma. The survey results suggest that while there is a potential for the drug to achieve sales of more than £3 billion, the initial market uptake is expected to be slow. The analyst indicated that significant sales figures would be contingent upon positive data from first-line treatment trials expected around 2027 or 2028, which would need to demonstrate a minimal residual disease (MRD) clearance rate of over 50%.
The initiation of coverage by BNP Paribas Exane with a Neutral stance reflects a cautious but not entirely pessimistic view of GlaxoSmithKline’s stock, balancing positive long-term forecasts with near-term regulatory and market challenges. The price target of £13.50 suggests that the firm sees limited upside potential for the stock at this time. According to InvestingPro analysis, GSK appears undervalued based on its Fair Value calculation, with 8 additional ProTips available to subscribers. For a deeper understanding of GSK’s valuation and growth prospects, access the comprehensive Pro Research Report, part of InvestingPro’s coverage of over 1,400 US equities.
In other recent news, GSK plc announced that the US Food and Drug Administration (FDA) has accepted the Biologics License Application for depemokimab, targeting asthma and chronic rhinosinusitis with nasal polyps (CRSwNP). This development follows positive results from the SWIFT and ANCHOR trials, demonstrating significant benefits in reducing exacerbations and hospitalization rates for asthma patients. Furthermore, GSK reported promising phase III results for depemokimab, highlighting its efficacy and safety in treating CRSwNP, with improvements observed over a 52-week period. In another strategic move, GSK completed its acquisition of IDRx, Inc., a company focused on precision cancer therapies, for up to $1.15 billion. This acquisition includes IDRX-42, an investigational treatment targeting mutations in gastrointestinal stromal tumors. Additionally, GSK appointed Dr. Gavin Screaton as a Non-Executive Director, effective May 1, 2025, bringing expertise in immunology and infectious diseases to the board. Meanwhile, Truist Securities has issued a statement regarding potential volatility in companies linked to the Center for Biologics Evaluation and Research following Dr. Peter Marks’ resignation. The firm maintains a BUY rating for companies with exposure to genetic medicine, such as BioNTech (NASDAQ:BNTX), amid this leadership change.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.