GlaxoSmithKline Share Price Forecast June 2021 – Time to Buy GSK Shares?
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Shares of GlaxoSmithKline (LSE:GSK) are in the news lately, as the company is looking forward to impressing investors on June 23rd. Elliot Management, a U.S.-based hedge fund, recently took a multibillion-pound stake in the company and have since lobbied for change. There are further concerns among shareholders regarding GSK chief executive Emma Walsey’s ability to lead the new pharma company as planned.
GlaxoSmithKline (GSK) Shares – Technical Analysis
As we take a look at the company’s financial statement, The company has a market capitalization of £71.22 billion and an Enterprise value(MRQ) of 92.42 billion. The company’s revenue for 2020 was £34.10 billion, with a profit margin of 16.86%. Its revenue for 2019 was £33.75 billion.
If we take a look at the technical data, we’ll see that Oscillators such as Relative Strength Index (14)(68.5), Stochastic(14,3,3)(79.0) and Commodity Channel Index (20)(87.6), are all pointing towards a neutral action. On the other hand, Moving averages such as Exponential Moving Average (10)(1407.8), Simple Moving Average (10)(1407.1), Exponential Moving Average (20)(1388.9) and Volume Weighted Moving Average (20)(1378.4) point towards a buy action. GlaxoSmithKline stock opened at 1417.4 with a downtrend of -0.43%.
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Recent Developments
There are plans for GSK to split itself into 2 companies next year, with an accompanying dividend cut. This is largely due to the opinion of institutional shareholders and analysts who believe that GSK has been applied a conglomerate discount by the market. In other words, they think that GSK’s different sectors such as consumer healthcare, vaccines and pharma would be valued more as individual companies rather than as a group. The company announced that we will be providing an investor update for shareholders on Wednesday, 23rd June. This will not only shed light on its new dividend plans but also will outline strategy and growth outlooks for the 2022-2031 period among other things.
Should You Buy GSK Shares Now?
If you choose to buy GSK shares today, you can look to take advantage of the group’s demerger of its consumer healthcare business. No one can guarantee that the aggregate value of the new shares in the 2 entities would be higher than the combined entity. There is always a risk that the dividend will be lower and the market can respond negatively when it gets more detail on the company’s new dividend policies and corporate structures.
The company expects that the aggregate dividend of the two new entities will be less than 80p. Of course, the analyst consensus can prove to be too pessimistic or optimistic. However, despite the areas of concern mentioned above, you will be wise to buy GSK shares today. The company separation is ultimately expected to unlock value, as standalone businesses can better perform in an energised and focused management environment.
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