On Monday, Guggenheim Securities adjusted its stance on shares of GlaxoSmithKline (NYSE:GSK), upgrading the stock from Neutral to Buy. The firm's decision follows recent updates on the company's revenue and a growing confidence in the potential for margin benefits.
These factors, according to the firm, suggest an attractive upside for the stock, especially if the issues surrounding Zantac are resolved favorably.
The firm has raised its global sales estimate for GlaxoSmithKline for the year 2024 to £30,919 million, an increase from the previous estimate of £30,216 million. This update is slightly below the consensus estimate of £31,171 million. Additionally, the firm's core earnings per share (EPS) estimate for 2024 has been increased to 156 pence from the prior estimate of 150.9 pence, surpassing the consensus estimate of 151 pence.
The investment thesis for GlaxoSmithKline is driven by several key factors, including the estimated sales of Arexvy, which Guggenheim expects to reach £1,235 million in 2024, compared to the consensus estimate of £1,041 million.
The firm anticipates Arexvy's expansion to adults aged 50-59 and positive updates on dosing following third-season data. For Shingrix, Guggenheim forecasts sales to be in line with estimates at £1,541 million for 2024, supported by the partnership with Zhifei, which is expected to boost market penetration in China.
Guggenheim's analysis also indicates confidence in the growth of GlaxoSmithKline's long-acting HIV profile and a successful relaunch of Blenrep. The company's guidance for a margin of over 31% by 2026 is seen as achievable, with stable margins in subsequent years expected to be supported by strong product performance.
The firm has set a price target for GlaxoSmithKline at £20.31 per share, which represents a 22% potential increase from the last closing price.
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