Deutsche upgrades GSK after strategy day

Deutsche Bank upgraded GlaxoSmithKline to 'hold' and raised its target price on the drugmaker's shares after it set out strategic targets.

GSK said on Wednesday it was targeting sales of more than £33bn once its consumer healthcare business had been spun out in a refocus on vaccines and speciality medicines.

Under pressure from activist investor Elliott, GSK plans to split into two companies, biopharma new GSK and a consumer healthcare business, which owns brands such as Aquafresh, Panadol and Nicorette.

Emmanuel Papadakis, Deutsche's analyst, said Chief Executive Emma Walmsley's guidance was "reasonably credible" that modestly surprised on the upside and avoided potential banana skins. Papadakis upped his target price on GSK shares by 3% to £13.50 and increased his rating from 'sell'.

"We think GSK will now have many hard yards to cover in order to deliver on the double-digit EBITA (earnings) guidance to 2026 and more importantly, confidence on pipeline potential and sustainability of the business beyond 2026," Papadakis wrote in a note to clients.

GSK shares fell 0.4% to £14.03 at 10:52 BST.