GSK raises 2025 sales forecast after strong growth in specialty medicines

GSK raised its 2025 sales and earnings guidance after reporting stronger-than-expected third-quarter results, driven by robust double-digit growth in its HIV and cancer drug portfolios. The company now projects annual revenue growth of 6%-7% and core EPS growth of 10%-12%, an increase from previous forecasts, despite a 15% drop in Shingrix vaccine sales due to slower uptake. This revised outlook provides a positive trajectory as incoming CEO Luke Miels prepares to navigate future challenges including trade tariffs and patent expirations, with an eye towards achieving over £40 billion in annual revenue by 2031.

Analysis

GSK significantly raised its 2025 sales and earnings expectations following a robust third-quarter performance, with core earnings per share reaching 55 pence on sales of 8.55 billion pounds, surpassing analyst forecasts of 47.1 pence and 8.24 billion pounds, respectively. This outperformance was primarily driven by double-digit growth in its HIV and cancer drug portfolios.

The drugmaker now projects annual revenue growth of 6%-7% and core EPS growth of 10%-12% through 2025, an upward revision from previous guidance of 3%-5% revenue growth and 6%-8% EPS growth. This updated forecast incorporates potential impacts from trade tariffs, including a 15% tariff on Europe, demonstrating management's proactive risk assessment.

Despite the strong overall results, GSK reported a 15% drop in Shingrix vaccine sales, attributed to slower uptake among unvaccinated consumers, and noted broader pressures in the U.S. vaccine market due to political actions. However, overall vaccine sales of 2.68 billion pounds still exceeded analyst expectations, and the company maintained its 2025 forecast for broadly stable vaccine revenues.

Incoming CEO Luke Miels faces the task of navigating patent expirations and pricing battles, with investors anticipating he will steer GSK towards its ambitious 2031 annual revenue target of over £40 billion, significantly above current analyst estimates of approximately £34 billion. The positive sentiment surrounding the Q3 beat and raised guidance suggests confidence in the company's strategic direction.

Key Decisions for Investors

• Investors should acknowledge the strong Q3 performance and raised 2025 guidance, driven by key growth assets in HIV and oncology, as a positive fundamental signal.
• Closely monitor the vaccine segment, particularly Shingrix sales and the evolving U.S. regulatory and political landscape, as these represent a potential area of volatility despite overall vaccine sales beating expectations.
• Evaluate the long-term strategy and execution under incoming CEO Luke Miels, focusing on his plans to achieve the ambitious 2031 revenue target while navigating patent expirations and tariff impacts.