GSK (LSE:GSK) was upgraded to “buy” from “hold” by Berenberg, with the broker raising its price target to £22 from £20 following an assessment of the drugmaker’s pipeline and recent business-development activity.
GSK shares were up 0.4% at £18.62 in early London trading.
Berenberg said GSK was trading at 9.6 times estimated 2027 adjusted earnings, compared with 12.4 times for its European pharmaceutical peers, representing a discount of approximately 23%.
The broker said it believes the size of the discount is no longer warranted, citing changes in the breadth of GSK’s development pipeline and expected returns on research and development.
Berenberg Highlights GSK Phase 3 Pipeline
Berenberg said 10 of GSK’s 11 novel Phase 3 assets originated externally through business-development transactions.
According to the broker’s estimates, six of those late-stage assets could each generate peak annual sales of at least £2 billion.
Berenberg expects GSK’s pipeline to help offset the effect of patent erosion affecting dolutegravir. It forecasts group sales of approximately £39 billion in 2031, compared with consensus expectations of around £36 billion and GSK’s guidance for sales of more than £40 billion.
The broker identified recently launched products including Exdensur and Blenrep among potential contributors to future revenue. It also highlighted bepirovirsen, Nuvalent’s lung cancer assets and GSK’s oncology antibody-drug conjugate programmes with Hansoh.
Cost Savings Target £1.9 Billion Annually by 2029
Berenberg also pointed to GSK’s cost-reduction programme, which targets annual savings of £1.9 billion by 2029.
The broker expects the savings to support research and development expenditure and contribute to stable or improving margins as higher-margin oral HIV products begin to face patent erosion from 2028.
Regulatory and Clinical Updates Expected
Berenberg identified several upcoming regulatory and clinical events across GSK’s pipeline.
The broker expects US regulatory decisions on bepirovirsen for hepatitis B by October 26 and neladalkib for second-line ALK-positive lung cancer by November 27.
Further Phase 3 and proof-of-concept results are expected over the following 12 months from programmes covering small-cell lung cancer, HIV, asthma, food allergy and bronchiectasis.
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