Is GSK’s share price a brilliant bargain after this new vaccines deal?

The GSK share price continues to weaken despite a major vaccines deal with German company CureVac. Is now the time to pile in?

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It’s been a tough few weeks for the GSK (LSE:GSK) share price. Even news of a major vaccines agreement on Wednesday (3 July) hasn’t helped it to recover ground.

At £15.03 per share, the FTSE 100 firm was last trading marginally lower in mid-week trading. It has now lost all the gains it had earlier enjoyed in 2024.

I think GSK shares might now be a brilliant dip buy. Here’s why I think value investors should give it serious consideration right now.

Big news

To build its position in the lucrative vaccines market, GSK has announced a deal with German company, CureVac. It plans to pay up to €1.4bn to the cash-strapped company to take development control for certain vaccines.

GSK said it will acquire “full rights to develop, manufacture and commercialise globally mRNA candidate vaccines for influenza and COVID-19, including combinations”.

It will pay €400m up front, and up to another €1.05bn as certain development, regulatory, and sales milestones are met. The two companies have been working closely together since 2020 to develop mRNA vaccines for infectious diseases.

Huge opportunity

The agreement could significantly boost the profits GSK makes in a fast-growing marketplace.

Analysts at Statista, for instance, think total revenues from vaccine products will soar 28% between 2025 and 2028, to $88.6bn. Demand will driven by increased government promotion of vaccination programs and heightened consumer awareness of their life-saving benefits following the Covid-19 crisis.

Encouragingly, GSK is already establishing itself as a star player here. Sales of its vaccines like the blockbuster Shingrix treatment soared 16% in the first quarter of 2024 (at constant currencies), to £2.3bn.

Turnover was also helped by new product rollouts in the quarter. While getting product from lab bench to market can be a bumpy ride, a strong product pipeline suggests GSK is in good shape to keep this momentum going.


Investing in GSK doesn’t come without peril, however. The pharma sector is strictly governed, and an adverse decision from regulators can cost a fortune in lost revenues and extra R&D costs.

Last month, for instance, the US Centers for Disease Control and Prevention (CDC) pledged to restrict rollout of the respiratory syncytial virus (RSV) vaccine across older age groups. Jefferies analysts have said the decision could reduce the addressable market to 55m doses from a prior projection of 93m.

Another worry for GSK is the possibility of huge penalties related to Zantac. A judge in Delaware ruled last month that expert witnesses could be permitted in jury trials in cases claiming the heartburn drug causes cancer.

A top value stock

But all things considered, I still think the drugs giant has significant investment appeal. And particularly at current rock-bottom prices.

Its recent slump leaves GSK’s share price trading on a forward price-to-earnings (P/E) ratio of just 9.4 times. This makes it one of the cheapest companies in the pharma sector (AstraZeneca, for example, trades on a multiple of 18.8 times).

Investors can now also grab a 4% dividend yield from the drugs giant. As a whole, I think it’s an excellent value share for investors to consider this July, with Wednesday’s update providing even more reason to be optimistic.

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.

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended AstraZeneca Plc and GSK. 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.

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