GSK - New Start, But Old Problems Remain (8 pgs, HOLD, TP £17 [£18])
Post the Haleon spin & GSK share consolidation, we value New GSK at £17/share (12x 2023 EPS). We model that GSK is now at 1.5x net debt/EBITDA, which if spent wisely could help to partly offset GSK’s 2028 patent cliff (1/3 of 2027 EBIT) that will be factored into analyst models in 6 months. In our recent note [HERE] we showed the building blocks of our 4% EPS 2022-27 EPS CAGR. In our view, the longer it takes for material R&D success, the greater the likelihood that GSK is acquired for its Vaccines business & an acquirer views the ~£5bn R&D spend as a material source of synergies.For access to the full note, please contact Naresh Chouhan ( )
GlaxoSmithKline is a global healthcare company. Co.'s segments include: Pharmaceuticals; Vaccines; and Consumer Healthcare. The Pharmaceuticals segment is focused on developing new medicines in respiratory, HIV, oncology and immuno-inflammation, with discovery research exploring these and other areas. The Vaccines segment has a portfolio and pipeline of vaccines to help protect people throughout life. Co. delivers vaccines to people living in over 160 countries. The Consumer Healthcare segment develops and markets consumer-preferred brands in oral health, pain relief, respiratory, nutrition/gastro-intestinal and skin health.
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