Berenberg raises target price on GSK

Berenberg noted that GSK had delivered "solid Q4 results" on 1 February and 2023 guidance that came in at the top end of consensus expectations and in line with internal medium-term growth outlook for sales above 5% and operating profit above 10%.

The German bank stated the stock has recorded only "a limited recovery" since the dismissal of the Zantac multi-district court litigation in the US and, although state litigation continues, said it now sees the risk as "much reduced".

"We retain our 'buy' rating on GSK, noting that it offers medium-term growth in line with peers at a significant valuation discount," said the analysts.

"GSK trades on 9.6x 2024 adjusted earnings versus peers on 15.3x. On EV/NPV (including a £3.0bn Zantac liability), GSK trades at a 25% discount to global peers (0.79x versus 1.06x). Our price target of £17.30 is derived from an average of P/E relative and equity NPV valuation methodologies."

Reporting by Iain Gilbert at Sharecast.com