GSK (LSE:GSK) shares have become warm lately, up over 16% so far in 2026 (and 59% over the last 12 months). This is not only a much better return than e.g FTSE100 overall, it also represents a change in sentiment towards a company that has probably been disliked for over a decade.
But what’s behind this momentum? Is there anything else ahead?
What’s happening with GSK shares?
I don’t think GSK’s purple spot is due to one thing. But let’s start with good old-fashioned wages.
Full-year results for 2025 exceed expectations. Revenues rose 7% to £32.7 billion, led by 17% growth in the Specialty Medicines division (HIV, oncology and respiratory/immunology). Underlying operating profit reached £9.8 billion, up 11% on the previous year.
Being in the top flight AstraZenecahas remained in the shadows for so long, GSK’s pipelines are also starting to look more promising. For example, at least 13 modern anticancer drugs are currently in development.
It could also be argued that the market has already adjusted to the Brentford-based company’s decision to spin off its consumer division (Haleon) a few years ago and become a purely fun biopharmaceutical company. This means a more growth-focused strategy, which should appeal to a modern group of investors.
Still low-cost
Even though it’s already doing so well, there are a few reasons to believe the event will continue.
Data for the first quarter will be published on April 29. Unless there’s some nasty stuff lurking, I don’t see why this stock can’t continue to appreciate. A positive sign is the wave of executive purchases observed last month. We’re not talking about miniature changes either. If those who know the company best are willing to invest their own money, I find that very encouraging.
Secondly, the valuation remains reasonable. The price-to-earnings (P/E) ratio of 12 is still low compared to other healthcare companies. GSK also boasts above-average operating margins and return on capital (essentially what it gets back on the money it invests in the business), at least compared to other UK stocks.
The stock is also up 3.4%. Of course, it would be a mistake for investors to assume that dividends are guaranteed. However, it looks like GSK’s cash payouts will easily cover the expected profit. This assumes, of course, that analysts’ forecasts are about money.
This does not mean that the £86 billion ceiling is risk-free. A constant problem for pharmaceutical companies is the expiration of patents on some of their drugs. This includes GSK. Moreover, some/all of the above-mentioned modern drugs in development may fail.
Great option
As I write, GSK shares are the hottest buy this week AJ Bellinvestment platform. Given investor volatility, I don’t attach much importance to this. There will be another “stock market top” next week. From a stupid point of view, what’s more crucial is whether it’s a solid choice for the long term.
In my opinion, that’s how it is. While recent momentum may be due to valuations keeping pace with events, it remains a great defensive option to consider buying in uncertain times.
And I would say that’s where we are now.
