GSK Share Price Target Cut as Headwinds Expected to Weigh

HSBC lowered its price target on pharmaceutical giant GSK (LON: GSK) from 1,190p to 1,170p in a note to clients this week, maintaining a Reduce rating on the stock. 

The bank pointed to mounting risks from U.S. trade policy and ongoing structural headwinds in the biopharma sector as reasons for the lowered target.

In a note to investors, HSBC analyst Rajesh Kumar warned that the combination of first-time U.S. tariffs risks, combined with a large patent cliff and Part D/Inflation Reduction Act headwinds, could create some pressure on biopharma earnings.

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HSBC estimates that if a 25% tariff were imposed on biopharma products entering the U.S., innovative pharmaceutical companies could face earnings headwinds in the range of 6% to 14%.

Furthermore, the bank claims the risks are not limited to direct trade barriers. HSBC highlights that a closer look at accounts and supply chains shows that potential risks to earnings might emanate from other mechanisms, such as tax rates, depending on how tariffs are structured.

GSK has already been contending with a patent cliff and the anticipated financial effects of the Inflation Reduction Act, particularly around Medicare Part D drug price negotiations. Tariffs would add a new and potentially costly layer of uncertainty.

Shares in GSK have declined more than 4% over the past month, but they are up 4.8% year-to-date. In the past 12 months, they are down 14.6%.