Analysts at Deutsche Bank upgraded biopharmaceutical firm GSK from ‘hold’ to ‘buy’ on Friday as they updated estimates and made changes to their net present value assumptions.
Deutsche Bank stated HIV makes up more than 20% of GSK sales, likely in excess of one-third of underlying earnings, and was “instrumental” to the long-term outlook.
The German bank, which also hiked its target price on the stock from 1,500.0p to 1,700.0p, said the net result of its fresh look at the stock saw it increase sales/EBITA estimates by low-to-mid-single digits over the mid-term and mid-to-high-single digits over the long term.
“At a 4% dividend/9% FCF yield, 9x FY23E P/E for +3/+8% sales/EPS CAGRs FY22-26E, we think GSK is too cheap if there is any semblance of sustainability through FY27/28, something we now think is probable courtesy of long acting injectables in HIV and RSV, with potential upside from bepirovirsen in HepB,” said DB.
Reporting by Iain Gilbert at Sharecast.com
