GSK (LSE:GSK): Evaluating Valuation After a Strong Share Price Rally

GSK (LSE:GSK) has quietly kept climbing this year, and with the shares up around 43% over the past year and nearly 25% in the past 3 months, investors are taking notice.

See our latest analysis for GSK.

That momentum has not come out of nowhere, with a solid run of clinical updates, resilient demand for its vaccines and specialty medicines, and a rising dividend combining to push GSK’s share price steadily higher and deliver strong multi year total shareholder returns.

If GSK’s recent climb has you thinking about where else defensive growth might show up in healthcare, it could be worth exploring healthcare stocks for other ideas.

Yet with the shares now flirting with analyst targets and earnings still growing, the key question is whether GSK is trading below its true worth or if the market has already priced in the next phase of growth.

Most Popular Narrative Narrative: 1.6% Undervalued

With GSK last closing at £18.34 against a narrative fair value near £18.64, the current pricing sits almost exactly on those long term assumptions.

Strategic R&D investments and business development (multiple Phase III starts, advanced modality deals, new manufacturing capacity, and collaborations such as with Hengrui) are accelerating pipeline momentum, with expectations for meaningful late stage readouts and new launches through 2026 and beyond, increasing the visibility and durability of future revenue growth.

Read the complete narrative.

Curious how mid single digit sales growth, rising margins, and a lower future earnings multiple can still justify upside from here? The key assumptions will surprise you.

Result: Fair Value of £18.64 (ABOUT RIGHT)

Have a read of the narrative in full and understand what's behind the forecasts.

However, looming patent expiries and ongoing Zantac litigation could pressure cash flows and margins, challenging the assumption that recent earnings momentum is sustainable.

Find out about the key risks to this GSK narrative.

Build Your Own GSK Narrative

If you see things differently or would rather dive into the numbers yourself, you can build a personalised view in just minutes: Do it your way.

A great starting point for your GSK research is our analysis highlighting 4 key rewards and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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