JPMorgan ups Glaxo to 'neutral', says consensus now looks achievable

JPMorgan Cazenove upgraded GlaxoSmithKline to ‘neutral’ from ‘underweight’ and lifted the price target to 1,370p from 1,320p.

The bank noted that medium-term consensus earnings per share estimates have fallen 15-18% year-to-date and expectations now look achievable, with downgrades no longer a concern.

In addition, it said a pipeline review suggests the company’s upcoming research and development day has a positive risk/reward.

JPM said expectations are low heading into the R&D day, due to historical pipeline setbacks, and limited disclosure.

“We don’t anticipate big upgrades, but we expect the event to be supportive, potentially increasing appreciation of the early-stage pipeline and partnered assets,” it said. It expects a focus on oncology epigenetics, which involves turning off cancer genes, and very early stage immuno-oncology projects.

Finally, JPM said the 6% dividend yield provides near-term support.

At 1230 BST, Glaxo shares were up 1.2% at 1,321.34p.