Jefferies resumes GSK coverage at 'buy', sees 30% upside on oncology firepower

Jefferies has resumed coverage of GSK PLC (LSE:GSK, NYSE:GSK) with a buy rating and a 2,500p price target, implying roughly 30% upside from the 1,916.50p close.

The broker argues a run of business development deals has brought the drugmaker's £40 billion 2031 revenue target within reach without straining the profit and loss account.

Jefferies has added £3 billion to its top-line forecast, taking its 2031 revenue estimate to £37.5 billion, and says that is despite remaining cautious on the Blenrep launch.

The bank values GSK at around a 10% discount to the 2027 sector price/earnings multiple of 13 to 13.5 times.

Central to the case are what Jefferies calls duration assets, drugs patients stay on for long periods, acquired through the takeovers of IDRx and Nuvalent. The $10.6 billion Nuvalent deal, which completed on 15 July, brought in neladalkib and zidesamtinib, two targeted lung cancer therapies now under review by US regulators.

Jefferies reckons GSK is absorbing about half the dilution from that transaction through efficiencies, which it reads as evidence of further scope for margin control into 2027 and 2028.

The broker sees neladalkib as the bigger prize, with potential sales of $2.4 billion by 2034 in first-line ALK-positive non-small cell lung cancer, rising towards $4.2 billion by 2036. Zidesamtinib, which faces a US decision on 18 September, is modelled at $1.9 billion by 2034.

Jefferies argues the market is ignoring GSK's early-stage oncology portfolio, principally its B7H3 and B7H4 antibody drug conjugates alongside IDRX-42, which it believes could together represent a peak opportunity above £6 billion.

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