The FTSE 100 pharmaceutical giant GlaxoSmithKline‘s (LSE: GSK) share price had a very decent 2021, rising almost 20% and easily outpacing the the lead index. It’s had a pretty good start to 2022 too, albeit as a result of Unilever‘s interest in acquiring its consumer healthcare business rather than any news on trading. That’s all set to change when GSK provides the market with Q4 numbers on 9 February.
For me, this definitely makes the company one to watch. It’s not the only top-tier stock I see myself checking in on either.
Bid target
Unilever has ruled out another bid for GSK’s brands. Whether this is actually true, it’s certainly got the market talking about these sleepy giants once again. There’s little doubt the CEOs of both companies, but particularly GSK’s Emma Walmsley, are under pressure to deliver for their owners.
I suspect Walmsley might be willing to do a deal… eventually. I also believe that most shareholders would support this if GSK’s leader promised to return the vast majority of what it receives from the sale back to them. Of course, she may have other ideas.
If Unilever stays quiet over the next few weeks, GSK’s short-term performance will likely depend on whether it’s been able to build on the rebound in sales of non-Covid-19 vaccines seen in Q3. There’s a chance this won’t be the case. The world has been grappling with the Omicron variant over the last few months, after all.
Overall however, I think there are more reasons to be bullish than bearish right now. GlaxoSmithKline’s shares aren’t overpriced at 14 times forecast earnings and come with an expected 53.8p per share total dividend. Yes, the latter is a step down from the 80p holders that have grown accustomed to. However, it still equates to a 3.3% yield. That’s almost identical to that offered by the index as a whole.
Another FTSE 100 stock I’ll be watching
After some early promise, the Barclays (LSE: BARC) share price looks like ending January near where it started. I’m actually a little surprised by this. The possibility of quicker-than-expected interest rate rises should be good news for the financial juggernaut and its peers.
Still, it’s hard to complain if you’re a Barclays shareholder. Despite the resignation of CEO Jeff Staley in November, the shares are 45% up on where they stood this time last year. For perspective, that’s a smaller gain than that achieved by Lloyds (53%) but higher than over at HSBC (27%).
Despite this stellar performance, Barclays shares still trade on a little less than 8 times earnings. That might be deemed cheap given its more diversified business model compared to other banks. A 4.1% yield should also be attractive to income hunters.
I don’t see 2021’s gains being replicated in 2022. Nevertheless, I do think this could prove a decent entry point if final results on 23 February are as good as I expect them to be. Revenue from Barclay’s investment banking arm was already showing great momentum when the company last reported to the market in October.
Of course, the aforementioned division could become something of a liability if market conditions were to suddenly worsen. So if I was to buy Barclays shares today, I would make a point of also being invested in stocks in more defensive sectors. Oddly enough, GlaxoSmithKline might be an ideal candidate!
