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I like it when a plan comes collectively, and that’s now occurring with a FTSE 100 dividend share I purchased in March 2024. The inventory in query is pharmaceutical big GSK (LSE: GSK), which regarded good worth once I purchased it, with a value‑to‑earnings (P/E) ratio of round 8. That was crushed down by years of underwhelming efficiency.
The GSK share value continued to slip after I purchased it. The primary purpose was the US class motion over its heartburn drug Zantac. No sooner was that settled with a $2.2bn payoff than US tariffs on prescription drugs threatened. I quickly discovered myself down round 15%, which wasn’t a part of the plan, being trustworthy, however I stayed calm and issues are actually trying up.
GSK shares up 12 % within the final month, lifting the 12‑month acquire to about 33%. I’m solely up round 10% personally however these are early days, as a result of this was a inventory I plan to carry years, and ideally a long time.
Lengthy-term FTSE 100 play
I final lined GSK for The Motley Idiot on 28 October once I famous the share value restoration was beneath manner however the shares nonetheless regarded good worth with a P/E of 10.6. The P/E ratio had edged as much as 11.45, however that’s nonetheless comfortably under the FTSE 100 common of round 18.
On 29 October GSK revealed its Q3 outcomes and so they have been sturdy. Core working revenue rose 11% to £2.99bn whereas core earnings per share jumped 14% to 55p.
The board declared a 3rd‑quarter dividend of 16p a share and confirmed £2bn of share buybacks by mid‑2026, with £1.1bn already achieved. The total‑yr steering was raised too.
GSK’s pipeline lastly seems to be delivering, speciality medicines are driving development and free money circulate is robust. The restoration feels credible.
Dealer forecasts so-so
But there are dangers. The tariff threats hasn’t totally lifted and whereas the pipeline is trying higher, potential blockbuster medication are by no means assured. A weak trial, regulatory setback or litigation shock may knock confidence.
Dealer forecasts produce a 12-month consensus value goal round 1,773p. Sadly, that’s truly under at present’s value round 1,806p. If these predictions are appropriate, the following yr gained’t be pretty much as good because the final. Analyst rankings are blended too: solely 9 of 23 price GSK inventory a Purchase whereas 4 say Promote.
But I imagine that is nonetheless a cut price, for buyers who’ve a protracted‑time period view. No one can say the place any share value will go within the brief time period, however over time, I’d count on GSK to ship a gradual mixture of development and earnings. The trailing yield is a modest 3.35%, however ought to develop steadily. The shares are forecast to hit 3.57% in 2025, and three.83% in 2026.
GSK seems value contemplating for buyers seeking to create a balanced portfolio, together with publicity to the pharmaceutical sector, historically seen as a defensive nook of the market. Right this moment seems like a great entry level, given the low P/E, however buyers ought to solely purchase with the long run in thoughts. That ought to at all times be a key a part of the plan when shopping for FTSE 100 shares.
