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I’m wary of writing about the GSK (LSE: GSK) share price, because I don’t want to jinx it. Over the last week, it’s started to show signs of life, and that doesn’t happen often.
Happily, I’m not a long-term investor in GSK. If I was, I’d know better than to start barking about a bit of upwards movement.
This is a renowned UK blue-chip in a key sector that’s performed horribly for 25 years. It started the millennium trading at around 1,750p per share. As I write, the shares are below 1,510p.
That’s a drop of 13.7%, although investors will have earned bags of dividend income along the way, and will still be comfortably ahead. Even so, it’s not great.
It’s a FTSE 100 flop
And it looks a lot, lot worse when compared to FTSE 100 rival AstraZeneca. Its shares opened 2000 trading at 2,540p. Today, they’re at 10,554p. That’s a rise of 315%. Astra’s yield tends to be lower, so long-term investors have got less income, but I don’t think they’ll be complaining.
I bought GSK shares in March last year, with a second purchase in June. Yet, so far, all I’ve got is disappointment.
I spent much of last year waiting to hear the outcome of a US class action suit against its Zantac treatment. I hoped the shares would power on once that was resolved. Which it was in October, for $2.2bn. The pain relief was brief.
On 15 November, global pharmaceuticals crashed after Donald Trump nominated anti-vaccine activist Robert F Kennedy Jr to lead the US Department of Health and Human Services.
The sector took a further beating when the nomination was confirmed in February, then again when Trump unveiled his ‘Liberation Day’ tariffs on 2 April.
While Trump’s 90-day paused triggered a V-shaped recovery, pharmaceuticals skipped that. Tariff threats still hang over the sector. The US made up 52% of GSK’s revenues last year, so there’s no escape.
In May, Trump threatened to sign an executive order to slash the price of prescription drugs for Americans. GSK fell again.
Sales are rising
There have been bright spots. On 4 February, GSK revealed that sales rose 7% in 2024 to £31bn, and lifted 2031 sales forecasts from £38bn to £40bn. In recent weeks, it enjoyed a run of positive drug trials and treatment approvals, which may explain why the shares have climbed 6% in the five days.
I’ve no idea whether this will continue, so I probably shouldn’t have opened my mouth. Donald Trump only needs to open his, and GSK could go anywhere.
Its shares are down 13% over the last year, offset by the trailing 4.04% yield.
GSK does look decent value though, with a price-to-earnings ratio of 9.6. The 18 analysts offering 12-month forecasts have a median target of 1,648p. If correct, that’s a modest 9% gain. Add the yield, and investors might get a 13% total return.
I’d settle for that. My hopes aren’t high and analysts are wary too. Of 23 giving a stock rating, a meaty 13 call GSK a Hold. Six say Buy. Four say Sell.
I’m going with the majority verdict – and holding. I certainly wouldn’t consider buying more. Let’s just hope the next 25 years are better than the last.
