After several years of turbulence it looks as if GlaxoSmithKline (LSE: GSK) has finally managed to convince investors that the company is back on the path to growth. Indeed, year-to-date shares in Glaxo have pushed higher by 7%, excluding dividends. If you include dividends paid over the period, the shares have returned an extremely impressive 11.5% since the beginning of the year.

If Glaxo continues on its current trajectory, it’s likely the company’s shares will hit 1,700p in the near future.

That being said, I should state that there’s no guarantee the company’s shares will return to 1,700. Although if Glaxo continues to impress investors in the way it has done over the past five months, there’s no reason why the shares can’t rack up another strong gain during the second half of the year.

Time to buy?

Investors have been buying Glaxo’s shares this year as the company has finally started to make some positive noises when it comes to growth.

The market has been concerned about Glaxo’s ability to grow in the increasingly competitive pharmaceuticals arena for some time and earnings have been falling for the past four years. For example, for full-year 2011 Glaxo reported earnings per share of 114p, last year the company reported earnings per share of only 76p a significant decline and below the company’s 80p per share dividend payout.

This year, however, City analysts expect the company to report earnings per share growth of 16% up to 88p, above the annual per share dividend payout of 80p. And management has already come out to confirm that the company is on track to meet this target. In fact, the first quarter of 2016 was one of the most impressive in several years for the company. Sales increased by 11%, to £6.23bn and earnings per share, excluding exceptional items and adjusted for currency, rose 8% to 19.8p, ahead of City forecasts that were calling for earnings per share of 18.2p.

Based on the company’s first quarter performance then, Glaxo could actually be on track to beat City earnings forecasts for this year, which would be a huge boost for investors, especially after the poor performance of the past few years.

Set for a rerating?

Based on current City estimates for growth, Glaxo is trading at a forward P/E of 16.4, significantly below the international pharmaceutical sector average. Many of the company’s large US peers trade at a P/E of 20 or more implying that if Glaxo proves to the market that it really is back on a growth trajectory, investors could be willing to pay 20 times earnings for the company’s shares.

20 times Glaxo’s predicted earnings per share of 88p for full-year 2016 indicates a share price of 1,760p. The company’s shares currently support a dividend yield of 5.5%.

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Rupert Hargreaves owns shares of GlaxoSmithKline. The Motley Fool UK owns shares of and has recommended GlaxoSmithKline. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.