Liberum upgrades GlaxoSmithKline to 'hold'
Liberum upgraded GlaxoSmithKline to ‘hold’ from ‘sell’, but cut the price target to 1,350p from 1,400p.
FTSE 100
7,877.05
17:14 18/04/24
FTSE 350
4,334.00
17:14 18/04/24
FTSE All-Share
4,290.02
16:54 18/04/24
GSK
1,583.50p
16:40 18/04/24
Pharmaceuticals & Biotechnology
21,132.77
17:14 18/04/24
“Somewhat counter-intuitively, we believe a dividend cut is increasingly likely and necessary and therefore we upgrade,” said Liberum.
“With the recent fall in the share and the increasing likelihood of a strategy change, we believe the current price is reflective of the long-term value of GSK, although we appreciate there is a near-term downside risk if the dividend is cut and the company invests in R&D and selling, general and administrative expenses rather than disinvesting as it is at present,” said Liberum.
Liberum said that clearly there is considerable dividend yield support at present and if the dividend is cut, that support will be removed. However, it pointed out that if the dividend is cut, the company will change its strategy.
By cutting the dividend, GSK would have significant strategic flexibility with a multitude of options to enhance the quality of earnings, it said.
At 10:46, GSK shares were down 0.2% at 1,368p.