Company Reports

As one of the largest pharmaceutical and vaccine companies, GSK has used its vast resources to create the next generation of healthcare treatments. The company's innovative new product lineup and expansive list of patent-protected drugs create a wide economic moat, in our opinion.

GSK reported 5% year-over-year revenue growth at constant currency and a 33.3% core operating margin. Management reaffirmed full-year guidance and announced a three-year restructuring program to cut annual operating expense by GBP 1.9 billion to fund late-stage pipeline and research and development.

In the quarter, GSK reported 5% year-over-year earnings growth at constant currency and core operating margin of 34.7%, a 1.8-percentage-point improvement over the same period last year. Management also reaffirmed full-year guidance of 3%-5% sales growth and 7%-9% core EPS growth.

GSK posted 14% year-on-year earnings growth at constant currency and a core operating margin of 19%, or 1.6 percentage points better than the same period last year. Management provided 2026 guidance of 3%-5% sales growth and 7%-9% growth for core earnings and core earnings per share.

As one of the largest pharmaceutical and vaccine companies, GSK has used its vast resources to create the next generation of healthcare treatments. The company's innovative new product lineup and expansive list of patent-protected drugs create a wide economic moat, in our opinion.

For its third quarter, GSK posted 8% year-on-year earnings growth at constant currency and core operating margin of 34.9%, up 40 basis points from the year-ago period. It upgraded its full-year guidance to 6%-7% revenue growth and 10%-12% core earnings per share growth.

As one of the largest pharmaceutical and vaccine companies, GSK has used its vast resources to create the next generation of healthcare treatments. The company's innovative new product lineup and expansive list of patent-protected drugs create a wide economic moat, in our opinion.

On Sept. 25, President Donald Trump announced that 100% tariffs on branded or patented pharmaceuticals will be enacted starting Oct. 1, unless the drugmaker is building its manufacturing plant in the US. At the time of this writing, share prices for big drugmakers have held steady.

GSK posted 6% year-on-year earnings growth at constant currency and core operating profit margin of 32.9%, or 180 basis points better than the same period last year. The company refreshed its full-year guidance to be "towards the top end of the range" of its previous guidance ranges.

GSK reported 4% year-on-year earnings growth (at constant currency) and core operating profit margin of 33.7%, or 30 basis points better than the same period last year. This was driven by strong growth in specialty medicines, which grew 17% and offset the 6% decline in the vaccines business.

As one of the largest pharmaceutical and vaccine companies, GSK has used its vast resources to create the next generation of healthcare treatments. The company's innovative new product lineup and expansive list of patent-protected drugs create a wide economic moat, in our opinion.

Wide-moat GSK’s fourth-quarter earnings were in line with our expectations. The company also revised its expectation for risk-adjusted revenue in 2031 upward to GBP 40 billion, an increase of GBP 2 billion. Although it lowered its outlook for vaccines, including Arexvy, this was more than offset by new revenue contribution from oncology drug Blenrep and various late-stage pipeline assets. Although this guidance is more optimistic than our own outlook, we continue to view the stock as undervalued and maintain our fair value estimates of GBX 2,200 per ordinary share and $58 per US ADR.

Following President-elect Donald Trump’s Nov. 14 announcement of the nomination of Robert F. Kennedy Jr. as secretary of the US Department of Health and Human Services, there have seen several more nominations for leadership in the 13 HHS divisions, including Dr. Mehmet Oz (Centers for Medicare and Medicaid Services) on Nov. 19, Dr. Marty Makary (US Food and Drug Administration) and Dr. Dave Weldon (Centers for Disease Control and Prevention) on Nov. 22, and Dr. Jay Bhattacharya (National Institutes of Health) on Nov. 26. Overall, we think these selections show a consistent theme of introducing potential disruptive forces to US healthcare, although their lack of experience and the power of career staffers in these agencies could serve to blunt any significant proposed changes. We continue to see obesity drugs and vaccines as areas of potential scrutiny, although without any clarity on proposals, we’re not making any changes to our fair value estimates following these announcements.

President-elect Donald Trump announced on Nov. 14 that he is nominating Robert F. Kennedy Jr. to be secretary of the Department of Health and Human Services under his new administration in 2025. RFK Jr. has strong views on public health and, if confirmed, could use his position to make changes at several of the 13 HHS divisions. In our Nov. 8 note, we discussed the potential tailwinds of a Trump administration, including possible repeal of the Medicare negotiation provision in the Inflation Reduction Act, less Federal Trade Commission scrutiny of acquisitions, and a likely continuation of lower corporate taxes. However, if RFK’s nomination is confirmed, we expect more “wild card” headwinds to the industry will come to fruition. As the HHS covers the US Food and Drug Administration and the Centers for Disease Control and Prevention, an HHS secretary skeptical of vaccine and obesity drug benefits could work to erode public trust, put up roadblocks for approval of new vaccines, and prevent the CDC from recommending any vaccines that make it through the approval process. With less federal guidance, we think it is possible certain states could waver in support of broad mandates for childhood vaccines. All of these could weigh on sales of vaccines in the US, including covid vaccine makers Moderna and BioNTech and big biopharma vaccine makers like GSK (we model 14% of GSK revenue from US vaccine sales in 2024), Pfizer (12%), Merck (9%), and Sanofi (6%).

We think that President-elect Donald Trump brings a mix of potential headwinds and tailwinds to the biopharma industry, and we’re not making any adjustments to our fair value estimates at this time. We had previously assumed that the most likely case was split control of the presidency and Congress by Democrats and Republicans. However, with Republicans locking in control of the Senate and holding a lead in elections in the House, we think it looks increasingly likely that Trump and his party could have control across both branches of government, making any potential policy priorities more likely to be implemented.

As one of the largest pharmaceutical and vaccine companies, GSK has used its vast resources to create the next generation of healthcare treatments. The company's innovative new product lineup and expansive list of patent-protected drugs create a wide economic moat, in our opinion.

Wide-moat GSK’s third-quarter earnings aligned with our expectations, and management reaffirmed its prior full-year guidance. We maintain our fair value estimate of GBX 2,200 per ordinary share, corresponding to an increased ADR fair value of $58 (from $54) due to currency fluctuations. Although the Zantac settlement resolution announced earlier this month significantly reduced GSK’s litigation uncertainty, the recent meeting of the US Advisory Committee on Immunization Practices has led management to reduce near-term guidance for sales of RSV vaccine Arexvy.

As one of the largest pharmaceutical and vaccine companies, GSK has used its vast resources to create the next generation of healthcare treatments. The company's innovative new product lineup and expansive list of patent-protected drugs create a wide economic moat, in our opinion.

Wide-moat GSK announced that it has agreed to pay as much as $2.2 billion to settle the majority of lawsuits in US state courts involving claims that Zantac caused cancer. Although this amount is higher than we anticipated, it is still within the range of expectations. We maintain our GBX 2,200/$54 fair value estimate.

Despite vaccine challenges, GSK reported second-quarter results slightly ahead of our expectations but not enough to impact our fair value estimate. We continue to view the stock as undervalued, with the market not fully appreciating GSK’s growth potential and overly concerned about Zantac litigation that looks manageable.