According to the latest Buy and Sell data from AJ Bell, UK retail investors have been scrambling to buy shares of the FTSE 100 pharma giant GSK (LSE:GSK) over the last week. Indeed, close to 5% of all Buy trades executed on the platform were targeted at this business.
So what’s behind this sudden popularity? And should I be following the crowd and investing too?
What just happened?
The sudden spike in buying activity hasn’t been caused by a single major news catalyst. In fact, the company hasn’t reported any earnings since February.
Instead, this newfound popularity is seemingly being driven by several compounding factors as we approach its next earnings report in just a few days’ time.
This includes:
- A still-reasonable valuation at 15.5 times earnings.
- Continued safe haven appeal against the wider macroeconomic and geopolitical uncertainty.
- A string of positive regulatory and clinical trial results.
As such, institutional analysts have built a relatively clear consensus for the firm’s upcoming earnings, including low-to-mid single-digit top expansion and high single-digit core operating profit growth expectations. But there are also some specific items that experts are watching closely.
What’s under the microscope?
GSK’s HIV franchise is a genuine cash machine as patients remain on lifelong medicines and closely follow their treatment regimens. That’s why it’s become one of GSK’s highest margin and most reliable parts of the business. But any surprise slowdown could spark wider concern.
Another area in focus is the group’s venture into oncology. Its four flagship cancer treatments (Zejula, Blenrep, Jemperli, and Ojjaara) are expected to generate £530m in revenue during the first quarter of 2026.
Another drug in analysts’ crosshairs is Depemokimab. This emerging respiratory treatment isn’t expected to deliver gangbusters revenue in 2026. But current forecasts have it on track to rise from around £187m this year to £875m by 2028. And any early commentary about this ramp-up will be closely monitored.
So far, this all sounds rather promising. But what are the key risks surrounding this FTSE 100 enterprise to watch out for?
Where are the weak spots?
Like most pharmaceutical giants, GSK’s facing a looming patent cliff with multiple blockbuster drugs losing their protection before the start of the 2030s.
As such, the race is on to discover new novel treatments to replace the expected loss in revenue and profits. And it’s why institutional analysts are paying such close attention to the progress of drugs in the development pipeline.
The risk for investors is that even late-stage clinical trials can often end up failing. After all, drug development is notoriously challenging, expensive, and uncertain. If a promising candidate in its vaccine or oncology portfolio fails, the FTSE stock’s recent surge in popularity might quickly start to reverse.
But is this a risk worth taking?
The bottom line
While the risk of poor clinical trial results cannot be ignored, it’s worth pointing out that GSK has quite a decent track record on this front. And thanks to these earlier successes, the group’s beaten analyst expectations for over four quarters in a row.
That clearly demonstrates talented leadership and a high-quality research pipeline. Therefore, investors looking for exposure to the pharmaceutical industry may indeed want to take a closer look at this FTSE 100 stock today. I know I certainly am.
