Can the GSK share price climb back to its 52-week peak?

The UK pharmaceutical stock is moving back up towards its year-high following the announcement of a new £65m drug facility, and regulatory progress in Japan for a new blood-cancer drug. The FTSE 100 giant has also announced investment in a new €250m vaccine facility in Belgium, while institutional investors have been increasing their exposure to the stock.  

  • GSK reveals new £65m UK drug manufacturing facility.
  •  Japan accepts regulatory filing for blood-cancer drug.
  • Institutional investors boost shareholdings.

The GSK [GSK.L] share price gained 4.53% last week, as the UK pharmaceutical stock moved back up towards its year-high, on the back of the announcement of a new, UK-based £65m drug facility, and regulatory progress in Japan for a new blood-cancer drug.

The FTSE 100 giant has also recently announced investment in a new €250m vaccine facility in Belgium, while a number of institutional investors have been increasing their exposure to the stock.  

The company, which engages in the research, development and manufacture of vaccines and medicines to prevent and treat disease, saw its share price close at 1,509.60p on Friday 15 September, just 6.18% below its 7 December 2022, 52-week high of 1,609.00p.

New £65m UK drug factory to open

GSK will open a new, leading-edge £65m drug manufacturing facility at its existing life sciences campus in Ware, Hertfordshire, reported the Telegraph It will enable the pharma giant to quickly scale up production of new medicines for viruses, including HIV. It’s been hailed as a fillip for Britain’s life sciences sector, amid criticism over the UK’s “very unattractive” tax policies. Earlier this year, AstraZeneca [AZN.L] opted to build its £320m new drug factory in Ireland, rather than the UK.

Soaring NHS taxes have left the pharma sector facing a £3.3bn bill this year, up from £563m in 2021. Drug companies are liable for a levy designed to protect the NHS from rising prices. The industry is in talks with the government over how the levy scheme will function next year. GSK chief Dame Emma Walmsley has urged “that the next scheme, which will start in 2024, gets this balance right.”

GSK makes Japan blood cancer drug progress

Japan's Ministry of Health, Labour & Welfare has accepted for review a new drug application for the blood cancer drug Momelotinib. The application is based on data from the key phase III trials Simplify-1 and Momentum. The news helped GSK stock gain 1.70% on Monday 11 September.

GSK also revealed an investment of over €250m in a new Belgium vaccine facility, which will see the construction of a freeze-drying vaccine arm, reported Bloomberg. The facility close to Brussels will produce non-living vaccines, like Zona and RSV shots, and live vaccines for measles and varicella. GSK aims to manufacture tens of millions of doses annually once the operation launches in 2027.

Institutional investors add to GSK shareholding

A swathe of institutional firms and hedge funds added to their stakes in GSK over recent quarters, according to filings with the US Securities & Exchange Commission. Thomasville National Bank increased its position in GSK’s US-listed ADR shares by 10.3% in the second quarter (Q2), and now owns 89,612 shares of GSK stock after purchasing an additional 8,368 shares. The bank’s holdings in GSK were worth $3,194,000 at the end of the most recent quarter.

Macquarie Group [MQG.ASX] acquired an additional 302,731 of GSK’s US-listed stock in Q1, increasing its holding by 27.8%. The Australian asset manager now holds 1,390,387 shares. A number of other institutional investors also recently added to their stakes in the business, including JPMorgan Chase [JPM], after the investment bank bought 44,633 shares, boosting its holding in GSK by 16.1%. JMP now owns 321,559 shares valued at around $11,441,000.

The sweep of institutional investments underscores an upbeat view on GSK’s recent performance, activity and long-term plans and suggests a positive outlook on GSK stock.

What’s the analysts’ view on GSK’s share price potential?

Among 22 analysts offering 12-month price targets for GSK with the Financial Times, the median target is 1,537.50p, with a high estimate of 2,461.00p, and a low estimate at 1,190.00p. The median estimate represents a slender 1.85% potential upside versus last week’s close at 1,509.60p. On the other hand, the most optimistic view among analysts following GSK stock indicates a potential upside of 63.0%, while the most pessimistic outlook suggests the shares are overvalued by 21.2%.

While broker recommendations take a positive bent, with one ‘buy’, eight ‘outperform’, 13 ‘hold’ and four ‘underperform’ ratings overall, analysts have overwhelmingly opted for a consensus ‘hold’ on GSK shares.

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