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GlaxoSmithKline shares under the microscope ahead of investor update

The next GlaxoSmithKline investor update is scheduled for Wednesday 23 June. This eagerly anticipated update is expected to reveal chief executive Emma Walmsley’s plan to build a war chest for sustained growth for shareholders.

  • GlaxoSmithKline shares up 4.94% in the last month
  • £5bn war chest planned to invest
  • Update billed as ‘biggest corporate change’ for GSK in 20 years
  • Ready to trade the GlaxoSmithKline share price? Open an account today

How have GlaxoSmithKline shares fared so far this year?

In the year to date, the GlaxoSmithKline share price has risen 3.47% as of 10am 21 June. It endured a turbulent start to 2021, with shares plunging from £13.76 to £11.91 by the end of February, as the third nationwide lockdown took hold.

The uncertainty in GlaxoSmithKline shares has also been caused by the prospect of a demerger, with GSK planning to split its company in half, creating a ‘consumer healthcare’ division as of 2022. First proposed in 2018, the decision comes after recent investors Elliott Management stated it would not encourage a sell-off of its vaccine and pharma departments.

The bull run on GSK shares since March, rising from £12.01 on 1 March to highs of £14.36 on 16 June, is a result of bullish noises coming from GSK’s upper echelons – most notably its chief executive Emma Walmsley.

GlaxoSmithKline shares have failed to outperform the FTSE 100 index based on the last five-year and ten-year charts. However, Walmsley has a plan to turbocharge the company, including a pipeline of new drugs and treatments.

What can we expect from the investor update on 23 June?

Shareholders will be waiting eagerly for the GSK investor update on 23 June, which has been described as an opportunity to ‘outline strategy, growth outlooks (2022-2031)’ as well as ‘capital allocation priorities and timing and approach to separation’.

At the forefront of its growth strategy is a move to slash shareholder dividends further to create a £5bn pot to invest and ‘firepower’ the sluggish GSK share price.

Early reports suggest it will be described as the ‘biggest corporate change for GSK’ in two decades. Additionally, Walmsley promised a ‘step change in growth and returns for shareholders’, by using this war chest to accelerate GSK’s drug pipeline. It also plans to pay down debts, extend patents on multiple products, and have the flexibility to make ambitious acquisitions.

What is GSK planning to invest in over the short-to-medium term?

In a recent letter distributed to GSK employees, Walmsley insists the company’s strategy remains to ‘focus on the science of the immune system’, as well as ‘human genetics and advanced technologies’, designed to tackle ‘infectious diseases, HIV, cancer and immune-mediated and respiratory diseases’.

Increased collaboration is underway between GSK’s pharma and vaccine divisions such as Vir Biotechnology. The aim is to develop new preventative treatments for infectious diseases like flu, which many fears are likely to return this winter as Covid-19 hospitalisations and deaths ease.

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This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

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