GlaxoSmithKline Share Price Forecast October 2021 – Time to Buy GSK?
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Shares of UK-based GlaxoSmithKline (LSE: GSK) are in the red today, currently trading around the 1398.6p range. The company is in the midst of FDA approval of one of its products, Cabotegravir, which could be the world’s first long-acting prophylactic HIV injection.
GlaxoSmithKline – Technical Analysis
GlaxoSmithKline’s financial statement indicates a market cap of £70.049 billion with total assets worth £7.011 billion. Revenue for 2020 was at £34.10 billion with a profit margin of 16.86% compared to £33.75 billion in 2019.
Moving averages such as Exponential Moving Average (10)(1398.1), Simple Moving Average (10)(1396.5), Exponential Moving Average (20)(1402.5) and Simple Moving Average (20)(1398.2) are indicating a sell action. On the other hand, Stochastic RSI Fast (3, 3, 14, 14)(82.5), Williams Percent Range (14)(−65.8), Bull Bear Power(0.5) and Ultimate Oscillator (7, 14, 28)(42.5) are neutral.
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Recent Developments
Scientists in the medicinal field been working tirelessly to develop therapies for AIDS in addition to preventative treatments for the initial stages, HIV, since the first reports of AIDS emerged back in 1981. GlaxoSmithKline owns HIV specialist ViiV Healthcare along with Pfizer and Shionogi as fellow shareholders. ViiV Healthcare has recently announced that the U.S. Food and Drug Administration (FDA) accepted and granted priority review for Cabotegravir, an injectable, long-acting pre-exposure prophylaxis (PrEP) drug.
The prevention of HIV using prophylactic treatments is a high priority even with the presence of several effective HIV treatments on the market to reduce the likelihood of progression to AIDS. The drastic reduction in the number of new HIV cases through prophylactic treatments is in the interest of public health which is where the drug can play a major role. It can significantly reduce the HIV incidence rate compared to existing prophylactic options. Clinical results demonstrated the drug was far more effective in preventing HIV than other alternatives, with only 0.41% of patients receiving the injection of cabotegravir every two months going on to test positive for HIV compared. It has thus achieved a 66% reduction in the incidence of HIV while only requiring six injections a year.
GlaxoSmithKline needs new product launches to maintain and build upon its HIV market share as its Dolutegravir HIV products are set to experience patent expirations near the end of this decade. The drug is only three months away from an almost certain preventative HIV FDA approval, with the company forecasting sales excess of 2 billion pounds or about $2.3 billion at the current exchange rate.
Should You Buy GSK Shares?
Investors interested in GSK have to look at Global Research Data which indicates that injectable therapies will account for the majority of the HIV PrEP market and cabotegravir-based therapies will dominate the market with a 79% market share in 2029. The company also has a number of drugs that make up its strong HIV and overall drug portfolios. This includes Nucala and Trelegy Ellipta, its two rapidly growing respiratory therapeutics.
However, investors should also look at its high payout ratio which prevents it from being in a core position for a dividend portfolio. The company’s anticipated payout ratio is in the high-70% range for this year and the low-70% range for next year which makes it more or less acceptable. Investors should consider its 5.8% yield rate as a secondary position in their portfolios. GSK investors shouldn’t expect much dividend growth with such a high yield. Pick up GSK shares only you want a high yield with a tolerable degree of risk.
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