GSK Stock (NYSE:GSK)
The American Depositary Receipts (ADRs) of GSK Plc (NYSE:GSK) fell by less than one percent before the market’s opening on Monday after Bank of America lowered its rating on the GSK stock to Underperform from Neutral. The firm stated that the British drugmaker is still the least preferred name among the European majors.
Even though the PE multiple for 2024 is seen as “undemanding,” the analysts led by Graham Parry noted that “we see insufficient catalysts to rerate GSK stock near-term.” As a result, they reduced their price objective for the company from 1640p to 1450p.
The analysts believe that claims relating to the heartburn drug Zantac would weigh on GSK, even though the business produces about £4 billion in free cash flow. According to the analysts, this more than discounts the company’s base case liability risk of $4 billion.
Despite good evidence from Phase 3, the analysts do not see why GSK’s RSV vaccine should be able to outcompete Pfizer’s competing shot. They also point out that the business has suggested a slower ramp for the RSV vaccine compared to its shingles vaccine Shingrix because there is a need to educate the general public and professionals about the condition.
While the group was “encouraged” by GSK’s “good” PIII statistics for its RSV vaccine, they concluded that Pfizer’s vaccine was legitimate competition because of “little to no apparent distinction on effectiveness” and “worse reactogenicity” for GSK.
They also argue that the company’s key franchises continue to be under pressure and that a weak pipeline makes it unlikely that the company will be able to avoid an upcoming patent cliff in 2028/29E for the HIV medication dolutegravir. Recent setbacks have made this problem worse, such as the recall of the blood cancer therapy Blenrep.
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