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GSK share price: Morningstar sees pharmco as undervalued

Morningstar analysts have weighed in on GlaxoSmithKline (LON:GSK), arguing that the group has reached an inflection point, moving beyond asthma drug Advair to HIV, vaccines and consumer healthcare. The comments follow the blue-chip group’s latest update this week, which showed that the company’s full-year earnings had surpassed analyst estimates as the blue-chip pharmco benefited from strong performance of its shingles vaccine.

GSK’s share price has jumped in London in today’s session, having added 1.11 percent to 1,563.60p as of 15:05 GMT. The stock is outperforming the broader UK market, with the benchmark FTSE 100 index having slipped marginally into the red and currently standing 0.19 percent lower at 7,080.27 points.

Morningstar weighs in on GSK

Morningstar analysts said in a note today that while GSK had reported fourth-quarter results slightly ahead of their expectations, they did not expect any major changes to their fair value estimate of 1,790p.

“We continue to view the stock as undervalued with the firm reaching an important inflection point, moving beyond generic launch of respiratory drug Advair in 2019 to a solid position in HIV, vaccines, and consumer along with a significantly improving pipeline with an increased focus in oncology,” Morningstar’s Daimen Conover commented, adding that in the drug development pipeline, the analysts were impressed with the group’s “ongoing shifts toward areas of unmet medical need, which is critical in the current payer environment”.

Other analysts on drugmaker

Barclays reaffirmed the FTSE 100 drugmaker as ‘equal weight’ today, without specifying a price target on the shares, while Kepler Capital Markets, which sees the company as a ‘neutral,’ set a valuation of 1,440p on the stock. According to MarketBeat, GSK currently has a consensus ‘hold’ rating and an average price target of 1,519.83p.

As of 15:19 GMT, Friday, 08 February, GlaxoSmithKline plc share price is 1,563.60p.

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