Kepler Cheuvreux moved GSK plc up to a Buy rating from Hold on Tuesday and raised its target price to 2,516p from 1,500p, an increase of 67.7% from the prior objective. The brokerage said the company’s sector discount is no longer a true reflection of its long-term revenue trajectory. At the time the note was published, GSK was trading at 1,915p, which the broker calculated as roughly 31.4% below its newly established target.
Alongside the upgrade and target price revision, Kepler trimmed its near-term adjusted earnings per share estimates. The firm lowered adjusted EPS for 2026 by 8% and for 2027 by 4%.
Kepler’s analysis highlights valuation differentials within the sector. GSK is priced at about 10 times 2027 estimated earnings, a discount relative to a peer average of roughly 14.8 times. The note observed that approximately half of sell-side recommendations on GSK remain at Hold.
On future revenue, consensus estimates for 2031 stand near GBP35 billion, which is about GBP5 billion shy of management’s stated ambition of GBP40 billion. This gap persists despite roughly 20% upward revisions to 2031 earnings per share over the past year, according to the brokerage’s summary of consensus figures.
Analyst Nicolas Pauillac drew attention to the comparison with UK peer AstraZeneca, where consensus expectations now sit slightly above the company’s $80 billion target for 2030 and the stock is widely rated a Buy. Pauillac questioned whether the valuation gap for GSK remains appropriate in light of what he described as stronger operational delivery and multiple upward adjustments to management’s long-term outlook.
The note therefore presents a mixed near-term and longer-term picture: reduced adjusted EPS forecasts for the mid-2020s alongside a materially higher price target driven by a reassessment of long-range revenue potential and a narrowing of the rationale for a persistent sector discount.
Summary
Kepler’s upgrade of GSK to Buy and a 2,516p target reflects the broker’s view that the stock’s sector discount is overstated versus its long-term revenue prospects, even as the firm trims earnings estimates for 2026 and 2027. The brokerage contrasted GSK’s valuation with peers and highlighted differences in consensus revenue trajectories relative to management targets.
Key points- Kepler upgraded GSK to Buy and raised the target price to 2,516p from 1,500p, a 67.7% increase.
- Adjusted EPS forecasts were cut by 8% for 2026 and 4% for 2027, even as longer-term revenue expectations were viewed more favorably.
- GSK trades at an estimated 10 times 2027 earnings versus a peer average of about 14.8 times, while consensus 2031 revenue of ~GBP35 billion trails management’s GBP40 billion target.
- Near-term earnings downgrades: The cuts to adjusted EPS for 2026 and 2027 introduce uncertainty for short-term profit performance and quarterly reporting - impacting equity market reactions in the healthcare and pharmaceutical sectors.
- Valuation mismatch: GSK’s lower multiple versus peers may persist if operational improvements or revenue convergence to management targets fail to materialize, affecting investor sentiment in UK pharmaceutical equities.
- Revenue target gap: Consensus revenue for 2031 remains about GBP5 billion below management’s goal, leaving a risk that long-term ambitions could be missed or require further revisions.