Undervalued GSK Looks Well Positioned for Growth Following the Demerger of Haleon

With the completion of GSK’s demerger of its consumer healthcare business, Haleon, along with the reduced share count, we are increasing our fair value estimate for GSK to GBX 2,230 per share (and $54 per ADR). The divestment of Haleon weighed on GSK's valuation by just over 10%, but this was more than offset on a per share basis due GSK reducing its share count by 20%. The demerger will allow the new GSK to focus purely on biopharmaceuticals and vaccines. We continue to believe the remaining GSK business should retain its strong competitive position stemming from intangible advantages related to its large patent-protected portfolio of drugs and vaccines, key to the firm’s wide moat. We also continue to believe GSK looks undervalued, with the market not fully appreciating the firm's growth potential.