GlaxoSmithKline: Did CEO’s revamp plan pass City muster? One leading bank has its say

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The highly-ranked pharma team at Deutsche Bank has upgraded its call on the stock in GlaxoSmithKline PLC (LON:GSK) after a capital markets day event at which management avoided “any of the several obvious potential banana skins”.

The investment bank moved to ‘hold’ from ‘sell’, nudging up its share price target 3% higher to 1,350p, which it said was a 20% sector discount, “but broadly in-line with relevant large peers”.

“The CMD [capital markets day] delivered a professional and competent impression (not always a given at these events) of a management team intent on executing on a reasonable set of growth ambitions over the next several years, with potential scope for upside if some of the pending pipeline read-outs begin to prove more favourable than the recent set,” Deutsche said in a note to clients.

On Wednesday GSK said it would cut the dividend as under-fire chief executive, Dame Emma Walmsley, set ambitious sales targets designed to kick-start the performance of the sleeping giant.

Britain’s second-largest drugs group is also spinning off its consumer healthcare business as part of the revamp intended to placate its critics, including activist investor Elliott Management.

Speaking to journalists ahead of the meeting with investors, Walmsley said: “I am a change agent, a business leader and I am very excited about the new plans for a new GSK that we’re laying out today.

“My focus is resolutely on leading us through this transformation through a successful separation.”

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