Down another 6% in a week! So will the GSK share price ever recover?

The GSK share price has had a rotten few years and now it’s heading south yet again. Investor Harvey Jones continues to hang on in the hope that it will recover.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Image source: GSK plc

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.

The GSK (LSE: GSK) share price is a nightmare and there’s little sign of respite for long-suffering investors.

Shares in the FTSE 100 pharmaceutical giant now trade 10.18% lower than five years ago. The misery continues, with the stock falling 5.97% last week. As a benchmark, it’s up just 1.47% over the last 12 months.

Should you invest £1,000 in Aj Bell 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 Aj Bell made the list?

See the 6 stocks

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

I thought the stock looked great value when I bought it earlier this year, but like many before me, I’ve been faced with a reality check. So what’s going on?

Why are the shares falling and falling?

I remember the glory days when, as GlaxoSmithKline, this was widely viewed as the ultimate buy-and-hold income and growth stock.

One FTSE 100 pharma stock has delivered on its long-term potential. Unfortunately, it isn’t GSK, but rival AstraZeneca.

I’m not sure Astra even sees GSK as rival these days. Astra is now the UK’s largest company with a market cap north of £180bn. GSK is worth just a third of that at £60bn.

Like every pharmaceutical company, GSK has seen patents expire on a string of blockbuster drugs, allowing generic rivals to eat into revenues. Unlike Astra, it has struggled to offset these losses with new, high-revenue products.

CEO Emma Walmsley has worked hard to replenish its drugs pipeline, but it’s proving a struggle. To fund GSK’s R&D efforts she froze the dividend at 80p per share for yonks. In 2022, it was slashed to 44p then to 42p the year after.

Spinning off its consumer healthcare division as Haleon in 2022 was supposed to sharpen GSK’s focus on pharmaceuticals and vaccines. All it’s done is encourage investors to focus on its weaknesses instead.

Fallen FTSE 100 dividend hero

Brokers are optimistic though. They’ve set an average one-year share price target of 1,905.5p. If GSK hits that, it would mark a rise of 24% from today’s 1,535p.

The forecast yield of 3.61% is bang in line with the FTSE 100 average of 3.54%. While that’d down from the 5.5% some will remember, shareholder payouts are covered 2.6 times by earnings, which offers scope for growth.

I haven’t even mentioned the big cloud hanging over GSK: ongoing US litigation over its discontinued heartburn blockbuster drug Zantac. The shares plunged almost 10% on 3 June after a Delaware judge allowed more than 70,000 lawsuits alleging it caused cancer.

GSK is confident of its case. It notes that since 2019, 16 epidemiological studies have examined the potential cancer link and found none. Last week, it announced confidential settlements in two lawsuits filed in California involving colorectal cancer. There are plenty more left.

There’s no way I’m buying more GSK shares while this hangs over the stock. I won’t sell, either, so all I can do is hang on grimly. Even if GSK gets the right result, I’m not convinced its shares the best use of my money today. But for now, I’m stuck with them.

AI Revolution Awaits: Uncover Top Stock Picks for Massive Potential Gains!

Buckle up because we're about to dive headfirst into the electrifying world of AI.

Imagine this: you make a single savvy investment in some cutting-edge technology, then kick back and watch as it revolutionises entire industries and potentially even lines your pockets.

If the mere thought of riding this AI wave excites you and the prospect of massive potential returns gets your pulse racing, then you’ve got to check out this Motley Fool Share Advisor report – 'AI Front Runners: 3 Surprising Stocks Riding The AI Wave’!

And here’s the kicker – we’re giving you an exclusive peek at ONE of these top AI stock picks, absolutely free! How’s that for a bit of brilliance?

Get your free AI stock pick

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 GSK. The Motley Fool UK has recommended AstraZeneca Plc, 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.

More on Investing Articles

Hand flipping wooden cubes for change wording" Panic " to " Calm".
Investing Articles

Growth stocks are crashing! Here’s what I’m doing now

Our writer shares his thoughts as growth stocks get crushed, as well as a favourite from the Nasdaq that he…

Read more »

Investing Articles

What’s going on with the Nvidia share price now?

The Nvidia share price is tanking. Once the most valuable listed company, Nvidia has seen more than $1trn wiped off…

Read more »

Investing Articles

This FTSE AIM stock has £2.3bn in net cash, and a market cap of £2.4bn!

I love this FTSE AIM stock, but it really hasn’t delivered for me yet. The stock trades with crazily low…

Read more »

Smart young brown businesswoman working from home on a laptop
Investing Articles

Down 15% in a week! Are these 5 FTSE 100 fallers screaming buys as markets plunge?

Five of Harvey Jones's favourite FTSE 100 stocks all have the same thing in common – they've fallen around 15%…

Read more »

Hand of person putting wood cube block with word VALUE on wooden table
Investing Articles

2 stocks that have been crushed and now offer a ton of value

Edward Sheldon has been scanning the market for stocks that offer value after the sell-off. Here are two shares he…

Read more »

Light trails from traffic moving down The Mound in central Edinburgh, Scotland during December
Investing Articles

£10,000 invested in Aston Martin shares at Christmas is now worth…

Aston Martin shares have fallen from above £10 in early 2020 to pennies today. Is this the perfect time for…

Read more »

Mindful young woman breathing out with closed eyes, calming down in stressful situation, working on computer in modern kitchen.
Investing Articles

Up 5% in the last crazy week! Are these 2 income stocks the ultimate FTSE defensive plays?

Harvey Jones picks out two FTSE 100 dividend income stocks that have actually climbed while stock markets are heading in…

Read more »

British flag, Big Ben, Houses of Parliament and British flag composition
Investing Articles

2 beaten-down UK shares that now look really cheap

Looking for cheap shares to consider for the long term? These two British stocks offer a lot of value right…

Read more »