GSK Stock Recovers, Rises Around 17% YTD: Time to Buy, Sell or Hold?

GSK GSK stock has risen 16.9% year to date compared with an increase of 7.0% for the industry. The stock has also outperformed the sector and the S&P 500 index, as seen in the chart below. The stock has also been trading above 200 and 50-day moving averages since early March.GSK Stock Underperforms Industry, Sector and S&PImage Source: Zacks Investment ResearchThe main driver of the stock’s recovery in 2025, following the 8.7% dip in 2024, was the increase in its long-term sales outlook for 2031, as announced on the fourth-quarter conference call. In February, GSK said it expects to generate sales of more than £40 billion by 2031, an increase from its previous projection of more than £38 billion. The increase was fueled by the inclusion of potential revenues from Blenrep, multiple new drug/line extension launch opportunities and late-stage pipeline progress.GSK enjoys a strong position in HIV and Vaccines therapeutic areas. The spin-off of the Consumer unit in 2022 has allowed it to focus on drug development. In July 2022, GSK de-merged its Consumer Healthcare segment into a standalone company. The independent Consumer Healthcare company was named Haleon HLN. GSK is witnessing increased sales growth in the Specialty Medicines unit. Its General Medicines segment has also outperformed expectations.However, GSK’s Vaccine segment sales are slowing down, mainly in the United States. Let's discuss these factors in detail to understand how to play GSK’s stock amid the recent price decline.GSK Specialty Medicines Unit on a Strong FootingGSK is witnessing increased sales growth of its Specialty Medicines unit, particularly reflecting successful new launches in Oncology and long-acting HIV medicines. Sales are rising in all areas, HIV, Immunology/Respiratory as well as Oncology. Sales of the Specialty Medicines unit rose 19% in 2024, driven by double-digit growth in all therapy areas.In the segment, while products like Nucala and Dovato are key top-line drivers, new long-acting HIV medicines, Cabenuva and Apretude, as well as new oncology drugs Jemperli and Ojjaara, are also witnessing strong patient demand and contributing to top-line growth. In 2025, the company expects sales in the Specialty Medicines segment to rise in a low double-digit percentage at CER, despite the impact of the Inflation Reduction Act or IRA. Specialty Medicines is expected to comprise more than 50% of GSK’s total revenues by 2031.GSK’s Promising PipelineGSK is increasing R&D investment in promising new long-acting and specialty medicines in Respiratory, Immunology & Inflammation, Oncology and HIV areas.Several of GSK’s regulatory applications seeking approval for new candidates or expanded use of marketed drugs are under review in some countries. Regulatory applications seeking approval of gepotidacin for treating uncomplicated urinary tract infection, the Blenrep combination for relapse refractory multiple myeloma, depemokimab for two indications (chronic rhinosinusitis with nasal polyps or CRSwNP and asthma with type II inflammation), and the expanded use of Nucala for chronic obstructive pulmonary disease (COPD) are under review in the United States. FDA decisions on all these filings are expected in 2025.In 2025, GSK expects to launch five new products/line extensions, including Blenrep, depemokimab (severe asthma and CRSwNP), Nucala for COPD, gepotidacin and pentavalent MenABCWY meningococcal vaccine. MenABCWY was approved in the United States in February 2025.GSK’s Vaccine Sales Slowing DownGSK’s Vaccine sales declined 3% globally and 27% in the United States in 2024 due to lower sales of the shingles vaccine, Shingrix and RSV vaccine, Arexvy. U.S. sales of Shingrix declined 13% due to lower demand as a result of challenges activating harder-to-reach consumers.Revised recommendations for RSV vaccinations issued in June 2024 by the US Advisory Committee on Immunization Practices (ACIP) hurt sales of Arexvy in the second half of 2024 in the United States. In June, the ACIP recommended the use of Arexvy for all adults aged 75 and above. However, for adults aged 60-74, the ACIP recommended the vaccine only for those who are at increased risk of severe RSV disease. A late RSV season and unfavorable comparison to the vaccine’s outstanding launch last year also hurt Arexvy’s sales in 2024.A challenging macro environment in China and potential for changes in vaccination policies in the United States is expected to hurt Vaccine sales in the near term. In 2025, the company expects sales in the Vaccines segment to decline in a low single-digit percentage at CER. GSK expects limited growth of both Shingrix and Arexvy in 2025.For the period 2021-2026, Vaccine unit sales are expected to rise in mid-to-high single digits which was lowered from the prior expectation of low double-digit percentage on the fourth-quarter conference call.GSK’s Valuation & Estimate MovementGSK’s stock is trading at an attractive valuation relative to the industry. Going by the price/earnings ratio, the company’s shares currently trade at 9.20 on a forward 12-month basis, lower than 16.82 for the industry. The stock also trades below its 5-year mean of 10.49. The stock is much cheaper than several other large drugmakers like Eli Lilly LLY, Novo Nordisk NVO, AbbVie and AstraZeneca.GSK Stock ValuationImage Source: Zacks Investment ResearchThe Zacks Consensus Estimate for earnings has risen from $4.11 to $4.20 per share for 2025 and from $4.67 to $4.69 per share for 2026 over the past 60 days.GSK’s EstimatesImage Source: Zacks Investment ResearchStay Invested in GSK’s StockGSK has its share of problems. Competitive pressure on HIV and respiratory drugs has risen.  The dolutegravir HIV franchise patent expires in the 2028-2029 period, and U.S. vaccine sales are slowing down. However, the company is consistently growing its sales and profits, mainly driven by its Specialty Medicines segment.For the five-year period till 2026, GSK expects to record more than 7% sales growth while core operating profit is expected to increase more than 11% on a CAGR basis. In this period, Specialty Medicines is expected to rise in low-to-mid teens percentage while General Medicines is expected to rise in low-single digit percentage. The growth in Specialty Medicines and improvement in General Medicines is making up for a slowdown in the Vaccines unit.The company also resolved the vast majority of Zantac litigations in 2024, which had long been an overhang on the stock.We suggest investors who own this Zacks Rank #3 (Hold) stock stay invested for now considering steady sales and profit improvement in the coming years. Consistently rising estimates also reflect analysts’ optimistic outlook for future growth in profits. Buying the stock at its present cheap valuation can prove prudent for long-term investors who are interested in buying blue-chip companies. 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Click to get this free report GSK PLC Sponsored ADR (GSK): Free Stock Analysis Report Novo Nordisk A/S (NVO): Free Stock Analysis Report Eli Lilly and Company (LLY): Free Stock Analysis Report Haleon PLC Sponsored ADR (HLN): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks