GSK’s Earnings Momentum Wanes as Jefferies Cautions on HIV Patent Cliff

Jefferies has downgraded GSK to Hold from Buy and cut its price target for the U.S.-listed shares to $55.90 from $67.40, according to a note to clients. The broker said the drugmaker is entering a period with fewer near-term catalysts.

GSK shares slipped about 1% on Thursday to 1,814 pence, after falling 4.8% on Wednesday following the company’s third-quarter results. The stock is down 0.8% year to date but remains up 8% over the past 12 months.

Analyst Michael Leuchten said GSK was trading at around 10 times 2027 earnings, a persistent discount to peers that highlights ongoing concerns about a looming earnings cliff.

He said new management has worked to narrow that gap through business development and HIV lifecycle management, which helped the stock re-rate this year.

“However, we are now entering a period of more limited earnings momentum, alongside launch execution risk, fewer meaningful pipeline readouts and questions around ViiV,” Leuchten wrote.

Jefferies said GSK has delivered much of its original Buy thesis. Deals have extended the portfolio’s duration, oncology has become a credible long-term growth franchise, and the firm believes the assets are in place to support GSK’s £40 billion revenue ambition for 2031.

“Our longer-term conviction is unchanged, but the risk/reward and catalyst profile has shifted as GSK approaches HIV patent expiries,” the analyst said.

With earlier pipeline de-risking now increasingly recognised by the market and the next major proof points further away, Jefferies said it no longer saw enough near-term upside to justify a Buy rating.

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