11th May 2023 18:48
(Alliance News) - GSK PLC's respiratory syncytial virus vaccine Arexvy has "best-in-class potential" following its approval by the US Food & Drug Administration on Wednesday last week, according to analysts at Berenberg.
The Brentford, London-based pharmaceutical firm's RSV vaccine has peak sales potential of around GBP3 billion, around 10% of its net present value, said Berenberg analysts Kerry Holford, Luisa Hector, Laura Hindley and Harry Gillis.
GSK plans to launch Arexvy in the US ahead ahead of the next RSV winter season, following a national vaccine recommendation decision in mid-June.
"Executing on the RSV opportunity is important for GSK to meet its mid-term growth targets and build investor confidence through the Zantac litigation headwinds," said Berenberg analysts.
Berenberg also noted "solid" first quarter results for GSK, beating consensus expectations and reiterating guidance for 2023. This is despite profit and sales falling.
In late April, GSK said its sales performance in the first quarter of 2023 reflected lower Covid-19 solution sales compared to the previous year. When excluding this Covid-related business, sales grew 10% at constant exchange rates.
In the quarter, turnover totalled GBP6.95 billion, down from GBP7.19 billion the previous year.
Pretax profit was GBP1.91 billion, down from GBP2.09 billion the year prior. Adjusted operating profit rose by 8% on a year before to GBP2.09 billion, and adjusted operating profit margin was 30.1%, up 3.1 percentage points.
GSK affirmed its full-year guidance, expecting turnover growth of between 6% and 8% and adjusted operating profit to increase between 10% and 12%.
Despite this, Berenberg said: "This was an encouraging update and leaves GSK well positioned for another year of growth ahead of its mid-term guidance."
Berenberg also noted GSK is "increasingly confident" in its "long-acting" portfolio and life beyond its dolutegravir treatment.
As a result, it reiterated its 'Buy' rating for GSK shares, setting a price target of 1,730.00 pence and arguing GSK "offers medium-term growth in line with peers at a significant valuation discount".
Shares in GSK closed up 0.6% to 1,444.80p each in London on Thursday, with a market capitalisation of GBP58.82 billion.
Berenberg said GSK trades on 9.1 times of its 2024 adjusted earnings versus peers on 16.2 times. On enterprise value/NPV, GSK trades at around a 30% discount to global peers, i.e. 0.76 times versus 1.11 times, it said.
On Thursday, GSK said it intends to sell part of its stake in consumer healthcare business, Haleon PLC, which it demerged last year.
It currently holds a 13% interest in Haleon which owns Sensodyne toothpaste, Panadol and Advil painkillers and Centrum vitamins.
Under the plans, GSK plans to sell up to 240 million shares, around 2.5% of Haleon's share capital. At Haleon's closing share price on Thursday of 340.93 pence, this would be worth around GBP800 million.
The sale will be conducted through a placing with institutional investors, with a price to be set by means of an accelerated bookbuild offering process which is to start immediately.
By Greg Rosenvinge, Alliance News reporter
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