Tempted by the GSK share price? Here are 3 things you should know

first_img I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. Tempted by the GSK share price? Here are 3 things you should know Enter Your Email Address “This Stock Could Be Like Buying Amazon in 1997” Image source: Getty Images. Roland Head | Wednesday, 22nd July, 2020 | More on: GSK Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! Our 6 ‘Best Buys Now’ Sharescenter_img I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. See all posts by Roland Head As a shareholder, I admit the GlaxoSmithKline (LSE: GSK) share price hasn’t been a dazzling performer in recent years. But if you’d held Glaxo shares for the last 10 years and reinvested the dividends, you’d have doubled your money. In my view, chief executive Emma Walmsley is doing the right things to move the business forward. I expect this FTSE 100 stock to continue to provide attractive income and capital gains for patient investors. Indeed, I’m hoping to buy more shares in the near future. Here are three reasons why I rate GSK as a buy.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…1. Taking the long view on coronavirusMany pharma stocks have rocketed this year, due to hopes they’ll be the first to discover a vaccine for coronavirus. GSK’s share price has lagged behind by comparison, but I don’t think investors should be too concerned.Glaxo makes around one-third of its profits from vaccines and is a big player in this sector. The firm is involved in several collaborations to develop a vaccine for Covid-19. However, the group’s main focus is on technical solutions to help improve the effectiveness of a coronavirus vaccine, and defend against future outbreaks.This may seem less exciting than a direct hunt for a magic bullet cure, but I suspect it’ll drive a stronger financial performance over the medium term.2. Climbing the patent cliffWe don’t hear much about the patent cliff anymore, but it’s still a real problem. Patent expiry on popular medicines tends to result in the introduction of cheap generic competitors.A good example is Glaxo’s Advair asthma drug. FTSE 100 rival Hikma Pharmaceuticals is currently in the late stages of introducing a generic alternative. Advair has been a big seller for GSK for many years, but US sales fell by 40% during the first quarter of this year, due to generic competition.I think GSK’s share price is under pressure because the firm hasn’t yet matched rival AstraZeneca‘s success in finding new big sellers. However, I expect the situation to gradually improve over the next few years. In the meantime, I think there’s another potential catalyst that could give Glaxo stock a boost.3. GSK share price could rise after splitGlaxoSmithKline currently has a rather unfashionable conglomerate structure. Its pharmaceutical businesses are grouped together with a consumer healthcare operation which owns brands such as Sensodyne, Panadol and Nicorette.Consumer brands like this are attractive assets, in my view. They generate reliable cash flows from regular repeat purchases by millions of customers. But it’s a quite different business to developing pharmaceutical products, such as vaccines and cancer treatments.Walmsley seems to agree. Over the next couple of years, she’s planning to separate GlaxoSmithKline’s consumer business into a company listed on the London stock market. The end result should be two more tightly-focused companies, with stronger finances. I believe splitting the group should lead to a higher valuation for both sides of the business.At current levels, GSK’s share price values the stock at 14 times forecast earnings, with a dividend yield of 4.9%. I see this as a good level to buy for a long-term position Simply click below to discover how you can take advantage of this. Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. Roland Head owns shares of GlaxoSmithKline. The Motley Fool UK has recommended GlaxoSmithKline and Hikma Pharmaceuticals. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.last_img read more