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.
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.
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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.
