GSK Reinstated at Buy by Jefferies with 30 Percent Upside Potential on Oncology Pipeline

Jefferies has reinstated coverage of GSK PLC with a buy recommendation and a price target of 2,500 pence, representing approximately 30 per cent upside from the closing price of 1,916.50 pence. The investment bank contends that a series of business development transactions has positioned the pharmaceutical company to achieve its £40 billion revenue target for 2031 whilst maintaining profit and loss discipline.

The broker has increased its revenue projections by £3 billion, bringing its 2031 estimate to £37.5 billion. This forecast maintains a conservative stance on the Blenrep product launch. Jefferies values GSK at roughly a 10 per cent discount to the anticipated 2027 sector price to earnings multiple of 13 to 13.5 times.

The investment thesis centres on what Jefferies characterises as duration assets, therapies requiring extended patient treatment periods acquired through the IDRx and Nuvalent acquisitions. The $10.6 billion Nuvalent transaction, which closed on 15 July, added neladalkib and zidesamtinib to the portfolio. Both targeted lung cancer treatments are currently under regulatory review in the United States.

Jefferies estimates that GSK is offsetting approximately half of the dilution from the Nuvalent acquisition through operational efficiencies, suggesting additional margin management capacity extending into 2027 and 2028. The firm identifies neladalkib as the more significant commercial opportunity, projecting revenues of $2.4 billion by 2034 in first-line ALK-positive non-small cell lung cancer, potentially reaching $4.2 billion by 2036. Zidesamtinib, which faces a regulatory decision on 18 September, carries a revenue forecast of $1.9 billion by 2034.

The broker maintains that equity markets are overlooking GSK’s early-stage oncology pipeline, particularly the B7H3 and B7H4 antibody drug conjugates alongside IDRX-42. Jefferies believes these assets collectively represent a peak opportunity exceeding £6 billion. For mocertatug rezetecan, the B7H4 candidate targeting ovarian and endometrial cancers, the bank forecasts peak sales of $2.25 billion against a consensus estimate of £1.5 billion, with upside potential above $5 billion should maintenance therapy applications prove viable.

The firm’s projection of $3 billion for risvutatug rezetecan substantially exceeds the $1.6 billion consensus figure. October’s ESMO conference has been identified as a potential catalyst for revaluation. Jefferies also suggests that consensus estimates undervalue bepirovirsen in hepatitis B treatment, where phase III data demonstrated a 19 per cent functional cure rate compared with zero in the placebo group.

The broker’s bull case scenario values shares at 2,750 pence, whilst the bear case of 1,450 pence assumes an absence of efficiency programmes and underperforming product launches.