GSK shares boosted by Jefferies upgrade

“We have upgraded GSK to ‘buy’ from ‘hold’ with a target price of 2,000p as we believe that the improving yield quality will continue to attract investors down to a yield of 4% or less,” Jefferies said in note to investors.

Jefferies said it believes that fears of a dividend cut associated with the appointment of new chief executive are “overdone” and that the macro environment, with falling bond yields, could see the shares driven up to a 4% dividend yield.

Andrew Witty has decided to step down as chief executive and GSK has said the search for a replacement is currently underway.

“GSK's 4.9% dividend yield is becoming increasingly well covered as its earnings rise, helped by recent foreign exchange movements, a strong performance from ViiV (GSK’s healthcare business) and better than expected margin progression,” Jefferies added.

Shares rose 1.28% to 1,667p at 1006 BST.