Brokers offer support to under-fire GSK plans

A GROWING number of City analysts have come out in support of GlaxoSmithKline’s restructuring plan under chief executive Emma Walmsley despite the efforts of activist investor Elliott to stir up shareholders.

Brokers Morgan Stanley, Liberum, Jefferies and Berenberg all issued research notes broadly supportive of the strategy which will split off the consumer arm and focus “new” GSK on its pharmaceuticals and vaccines operations.

All said the current bombed-out share price did not reflect the true value of the business post-restructuring.

However, they stressed that GSK had to build up investors’ confidence in the strength of its pipeline of drugs in development. Key to this will be its June 23 investor day when Walmsley’s team will give more details on prospects for New GSK in the first five years of its life.

Berenberg said patent expiries meant GSK needed to get two “megabuster” new drugs to market by the middle of the decade.

Morgan Stanley said the new five-year targets expected at the event could trigger upgrades to the City’s profit forecasts but warned increased disclosure on the progress in its pipeline was needed.

Several were expecting a dividend cut to fund investment in research and development. Liberum speculated a “part-IPO” might be signalled for the consumer division.