GSK shares surge around 6% as drugmaker raises sales target and boosts dividends

Shares of British pharmaceutical giant GSK surged on Wednesday after the company raised its long-term sales forecast and reported strong financial results for 2024.

The stock climbed 5.9% in early trading, making it the top performer on the FTSE 100 and on track for its biggest one-day gain since 2022.

GSK increased its 2031 sales target to more than £40 billion, up from its previous estimate of £38 billion.

The upward revision reflects the company’s confidence in its drug pipeline, particularly in specialty medicines, HIV treatments, and oncology drugs.

The improved guidance comes as GSK reported that its total sales grew by 3% in 2024, reaching £31.4 billion.

At constant exchange rates, this represented a 7% increase.

Growth was largely driven by the performance of its specialty medicines and HIV treatments, offsetting weaker vaccine sales.

GSK earnings rise despite Zantac litigation charge

GSK’s core operating profit grew by 11% at constant exchange rates, demonstrating strong underlying business momentum.

However, total operating profit dropped 40% to £4 billion due to a one-off £1.8 billion charge related to the settlement of Zantac litigation claims.

Despite the legal costs, the company remains optimistic about its future performance.

For 2025, GSK expects revenue growth of between 3% and 5% at constant exchange rates, with core operating profit projected to rise by 6% to 8%.

The company’s confidence is fueled by what it describes as an “outstanding” late-stage drug pipeline.

CEO Emma Walmsley highlighted GSK’s commitment to investing in research and development (R&D) to drive further innovation in respiratory, immunology, oncology, and HIV treatments.

£2 billion share buyback program and GSK share price forecast

GSK also announced plans to enhance shareholder returns.

The company declared a fourth-quarter dividend of 16p per share and expects to increase the total dividend for 2025 to 64p per share, up from 61p last year.

In addition, GSK unveiled a £2 billion share buyback program to be executed over the next 18 months, a move aimed at returning capital to investors while signaling confidence in the company’s growth trajectory.

Despite the strong market reaction, some analysts remain cautious.

Richard Hunter, head of markets at Interactive Investor, said,

Despite the warm reaction to the numbers in opening trade, it seems that a cure for all GSK’s ills may yet be a touch too early to call, with the market consensus of the shares as a hold likely to remain intact for the time being.

GSK’s strategy moving forward focuses on strengthening its pipeline and expanding its presence in key therapeutic areas.

With a strong drug portfolio, a robust pipeline, and a commitment to shareholder returns, GSK is positioning itself for sustained growth in the coming years.

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