Can the GSK share price soar higher after hitting 17-year high?

The British drug maker wowed investors last month after upgrading its full-year earnings guidance following a strong third quarter performance that sent shares soaring, with analysts believing the stock could climb even higher.

GlaxoSmithKline (GSK) saw its share price close to a 17-year high of £17.82 in the wake of its third quarter (Q3) results last month, with the drug maker recording strong sales growth, prompting it to upgrade its full-year earnings forecast.

GSK now expects earnings per share (EPS) to be ‘around flat’ year-on-year, representing an upgrade from its previous guidance that forecast EPS would decline by between 3% and 5% in 2019.

‘GSK has made further good progress in Q3, with sales growth across all three businesses, and we have today upgraded our full-year EPS guidance,’ GSK CEO Emma Walmsley said.

‘This quarter we have continued to strengthen our pipeline and have advanced assets in Respiratory, HIV and, notably, Oncology, where we are on track to file three innovative medicines by year end, following positive pivotal trial data.’

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Analysts believe GSK shares could see further gains

After its shares hit a 17-year high last month, GSK’s stock has fallen some 3% to trade at £17.11 levels as of 16:15 GMT on Monday.

But analysts remain upbeat about the prospect of the stock not only returning to record levels but breaking above them.

Analysts at DZ Bank remain the most optimistic, reiterating their ‘buy’ rating for the stock in October and issuing a target price £20 a share. Liberum Capital and Credit Suisse gave a price target of £18.90 and £18 respectively.

Based on the stock’s current price, the three banks believe that GSK’s share price has a potential upside of between 5.2% to 16.8%.

However, Barclays Capital reiterated it ‘equal weight’ rating for the stock, but issued a target price of £16.50, representing a potential downside for the share price of 3.5%

GSK will unveil its fourth quarter results on February 5.

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