Is it game over for the GSK share price?

Harvey Jones isn’t having much fun playing the GSK share price game. The FTSE 100 pharmaceutical stock must work hard to make investing fun again.

| More on:

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

If the GSK (LSE: GSK) share price was a video game, it would be flashing GAME OVER to me right now.

Shares in the pharmaceutical giant started 2025 trading at a 12-month low. Although they picked up slightly in January, they’re still down almost 10% over one year and 25% over five.

Created with Highcharts 11.4.3GSK PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

I can recall the days when, as GlaxoSmithKline, Motley Fool users saw this as the quintessential UK blue-chip. They loved its defensive resilience, solid share price, and beefy 5%+ yield. That must be more than a decade ago, I’m afraid.

Should you invest £1,000 in Gsk right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Gsk made the list?

See the 6 stocks

I bought the shares on a couple of occasions last year, hoping the glory days might return. Instead, my stake quickly slumped 20% and stayed there. In my portfolio, only Ocado Group and Aston Martin have done worse, and they’re very different beasts. Or should be.

Can this defensive hero fight again?

The board has struggled to deliver the promised growth from spinning off consumer healthcare arm Haleon in July 2022. The idea was that focusing on pharmaceuticals and ramping up R&D spending would drive long-term gains. Instead, legal threats and political pressure have clouded the outlook.

The overhanging Zantac litigation case has dented investor confidence, even though GSK settled a major US class action last year. 

Attacks on big pharma by President Donald Trump’s proposed health secretary Robert F. Kennedy Jr. haven’t helped. US healthcare policy is now highly uncertain. It’s always something with GSK these days.

The shares do look good value trading at just 9.1 times earnings. That’s well below the FTSE 100 average of around 15 times. Even cheaper than when I bought them.

While the dividend yield isn’t what it was, it has crept back above 4%. It now beats the average FTSE 100 yield of 3.5% but that’s more down to the falling share price than GSK largesse.

It’s a FTSE 100 pharmaceutical flop

GSK has posted a string of drug trial wins lately. Its specialty medicines division saw strong growth in Q3, with sales up 19%. HIV treatments climbed 12%, and oncology revenue surged 94%. 

The success of new launches such as Jemperli in endometrial cancer and Apretude for HIV prevention suggests the drug pipeline is finally picking up.

However, vaccine sales have been a disappointment, with key product Shingrix falling. RSV vaccine Arexvy collapsed 72% due to US guideline changes and the prior-year launch boost fading. If this trend continues in the full-year results, GSK could struggle again.

I’ll have a clearer view when GSK publishes full-year results on Wednesday (5 February). The board is targeting turnover growth of 7% to 9% and core earnings growth of 10% to 12%. If it delivers, things may look up. An upgrade would be lovely. But a miss could make my portfolio look even messier.

GSK is lining up for major product launches in 2025, including its new meningitis vaccine and treatments for asthma and COPD. Let’s hope for some positive noise about them. It’s not quite game over for GSK yet. But nor is it game on.

Should you buy Gsk now?

Don’t make any big decisions yet.

Because Mark Rogers — The Motley Fool UK’s Director of Investing — has revealed 5 Shares for the Future of Energy.

And he believes they could bring spectacular returns over the next decade.

Since the war in Ukraine, nations everywhere are scrambling for energy independence, he says. Meanwhile, they’re hellbent on achieving net zero emissions. No guarantees, but history shows...

When such enormous changes hit a big industry, informed investors can potentially get rich.

So, with his new report, Mark’s aiming to put more investors in this enviable position.

Click the button below to find out how you can get your hands on the full report now, and as a thank you for your interest, we’ll send you one of the five picks — absolutely free!

Grab your FREE Energy recommendation now

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Harvey Jones has positions in Aston Martin Lagonda Global Plc, GSK, and Ocado Group Plc. The Motley Fool UK has recommended GSK and Haleon Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Like buying £1 for 51p

This seems ridiculous, but we almost never see shares looking this cheap. Yet this recent ‘Best Buy Now’ has a price/book ratio of 0.51. In plain English, this means that investors effectively get in on a business that holds £1 of assets for every 51p they invest!

Of course, this is the stock market where money is always at risk — these valuations can change and there are no guarantees. But some risks are a LOT more interesting than others, and at The Motley Fool we believe this company is amongst them.

What’s more, it currently boasts a stellar dividend yield of around 8.5%, and right now it’s possible for investors to jump aboard at near-historic lows. Want to get the name for yourself?

See the full investment case

More on Investing Articles

Investing Articles

Here’s how much an investor would need to spend on Legal & General shares to target a £1,000 passive income

Using a well-known FTSE 100 firm as an example, our writer illustrates the passive income potential (and pitfalls) of stock…

Read more »

Young black colleagues high-fiving each other at work
Investing Articles

£10,000 invested in Unilever shares 12 months ago is now worth…

After years of inertia, Unilever shares have come to life over the last 12 months. And the FTSE 100 company…

Read more »

Investing Articles

Is it finally time for me to buy this FTSE 100 stock?

Stephen Wright has watched 3i outperform the rest of the FTSE 100 for what feels like forever. Is it finally…

Read more »

Bus waiting in front of the London Stock Exchange on a sunny day.
Investing Articles

Want to start buying shares with under £1,000? 3 things to figure out first

Christopher Ruane considers a trio of points he thinks a new investor on a limited budget could helpfully consider before…

Read more »

Buffett at the BRK AGM
Investing Articles

5 great lessons from the latest Warren Buffett letter

Christopher Ruane has been poring over the latest shareholder letter from investor Warren Buffett. Here's a handful of stock market…

Read more »

Investing Articles

The dirt cheap easyJet share price is staring me in the face

When Harvey Jones looks at the easyJet share price, he sees a brilliant buying opportunity staring right back at him.…

Read more »

British Pennies on a Pound Note
Investing Articles

This share helps me earn a second income — and it sells for pennies

Christopher Ruane looks at some pros and cons of one share he owns primarily for its potential to help boost…

Read more »

Investing Articles

Is it game over for JD Sports shares?

Harvey Jones has taken an absolute whipping at the hands of JD Sports shares. Should he accept defeat or pin…

Read more »