Will HIV drug sales maintain GSK share price’s upward trajectory?

Updates on sales of GSK’s HIV treatments may be key

GlaxoSmithKline PLC has seen steady share price growth since July 2023, buoyed by a diversified product portfolio and promising pipeline. As the British pharmaceutical giant prepares to report first quarter earnings on Wednesday 1 May, investors will likely be watching for updates on sales of GSK’s HIV treatments.

In March, ViiV Healthcare, GSK's specialist HIV company, announced that its recently approved long-acting HIV drug Cabenuva showed higher efficacy rates and improved patient adherence compared to daily oral regimens. Approved by the US Food and Drug Administration (FDA) in 2021, Cabenuva is an injectable treatment that only needs to be administered once a month or every two months.

By reducing dosing frequency, ViiV hopes to improve adherence for patients struggling with the burden of daily pills. Higher adherence rates could translate into better health outcomes and higher sales. As Cabenuva continues its global rollout in 2024, it may become an important growth driver for GSK this year and beyond.

Overall earnings growth expected

Wall Street analysts expect GSK to deliver year-over-year earnings growth in its first quarter report, forecasting rising revenues, especially in the vaccines segment. The consensus earnings estimate for the quarter is 36.42 pence per share, slightly down compared to the same quarter last year.

Revenues for the first quarter are projected to hit £7.067 billion, a slight increase versus the prior year’s £6.951 billion quarter. Driving this top-line growth is GSK’s specialty medicines unit, which contains its HIV franchise. The company has guided for sales from specialty medicines to expand by more than 10% this year.

In addition to HIV treatment sales, GSK has several other key growth drivers that could lift Q1 earnings. These include its shingles vaccine Shingrix, which struggled with supply shortages earlier in the pandemic but is now experiencing rising demand. The company also has new drug launches underway in oncology, immunology, and other areas.

With its consumer health joint venture with Pfizer also delivering steady results, analysts see GSK’s diversified product mix enabling resilient earnings growth this year despite economic uncertainty. However, the company faces challenges like generic competition and pricing pressures in the US market.

Investors will be listening closely on the earnings call for an update on these issues and the outlook for the remainder of 2024. HIV sales trends will be critical to watch amid new competition, but the early promise of Cabenuva could give GSK an edge. Strong uptake of this innovative treatment could act as a catalyst for the stock if momentum continues building.

Analyst ratings for GSK

LSEG Refinitiv data shows a consensus analyst rating of between ‘buy’ and ‘hold’ for GSK with 5 strong buy, 8 buy, 9 hold and 3 sell – and a mean of estimates suggesting a long-term price target of 1,898.38 pence for the share, roughly 13% higher than the current price (as of 30 April 2024).

Technical outlook on the GSK share price

The GSK share price, up over 13% year-to-date, remains on an upward trajectory and trades close to its March high at 1,720 pence.
If bettered, the April-to-July 2022 peaks at 1,835.5p to 1,843p would be back in sight.

GSK Weekly Candlestick Chart

Short-term upside pressure should be maintained while the mid-April low at 1,575p underpins. Currently unexpected failure there may lead to the September-to-October highs at 1,563p to 1,554.5p as well as the January low at 1,530p to be revisited.

GSK Daily Candlestick Chart