Liberum continues to see GlaxoSmithKline (LON:GSK) as a ‘buy,’ the analysts have said. The broker argues that the pharmco’s shares been beaten up for no good reason.
GSK’s share price has been steady in London this morning, having inched 0.21 percent higher to 1,514.17p as of 10:25 BST, largely in line with gains in the broader UK market, with the benchmark FTSE 100 index currently standing 0.17 percent higher at 7,480.38 points. The group’s shares have lost more than 10 percent of their value over the past year, and are down by some three percent in the year-to-date.
Liberum reiterated its ‘buy’ rating on GSK yesterday, while lowering its price target on the shares from 1,900p to 1,760p.
“GlaxoSmithKline is off c.10 percent versus EU pharma, in dollars, since the end of May, despite stronger fundamentals including benign competitor data in HIV, a quality beat at the second quarter, upgraded pharma margin guidance and the confirmed dividend,” the broker’s analyst Roger Franklin commented, as quoted by Citywire, adding that he believed that concerns about the pricing of respiratory drugs and the company’s research and development (R&D) programme “have unfairly weighed on the shares”.
The broker instead believes that “the earnings outlook is better than consensus expects and there is 16-percent upside to fair value if Glaxo can deliver just breakeven R&D over the longer term, in line with its historical performance”.
The 26 analysts offering 12-month price targets for GSK for the Financial Times have a median target of 1,705.00p on the shares, with a high estimate of 2,100.00p and a low estimate of 1,250.00p. As of September 29, the consensus forecast amongst 30 polled investment analysts covering the blue-chip group has it that the company will outperform the market.