GSK Receives Upgrade to Buy, Ferrari Downgraded to Sell

Key Takeaway

• Guggenheim Securities upgrades GSK to buy with a £20.31 price target, citing strong vaccine portfolio growth prospects.
• Citi downgrades Ferrari to sell due to rich valuation concerns, despite a 30% rally since December, setting a €329 price target.
• Analysts highlight GSK's revenue upside from Shingrix and Arexvy vaccines, contrasting with skepticism over Ferrari's current stock valuation.

GSK Upgraded, Ferrari Downgraded

Guggenheim Securities upgraded drugmaker GSK to buy, citing improved growth prospects in 2024 and beyond. Analyst Seamus Fernandez highlighted the strength in GSK's vaccine portfolio, predicting revenue upside and stable margins in the coming years. The upgrade comes with a £20.31 price target, indicating a 21% upside potential. On the other hand, Citi downgraded luxury sports car maker Ferrari to sell, despite a 30% rally since December. Analyst Harald Hendrikse expressed concerns about Ferrari's rich valuation, leading to a price target of €329, implying a 16% downside.

"We see continued strength in GSK’s vaccine portfolio, with a strong foundation in Shingrix and growth potential in Arexvy," Fernandez noted, emphasizing the potential for sales growth. Regarding Ferrari, Hendrikse acknowledged the possibility of further gains but deemed the current valuation as rich, warranting a sell rating.

GSK's Growth Potential

GSK's vaccine portfolio, including Shingrix and Arexvy, is expected to drive revenue growth, with potential expansion into new age groups and strong product performance. The company is anticipated to maintain stable margins and post revenue upside in the coming years. Sales of key products like Shingrix, Arexvy, and Blenrep are projected to support and potentially boost sales figures.

"We see continued strength in GSK’s vaccine portfolio, with a strong foundation in Shingrix and growth potential in Arexvy," Fernandez highlighted, pointing out the attractive upside potential in the stock.

Ferrari's Valuation Concerns

Despite a significant rally in Ferrari's stock price, Citi downgraded the luxury sports car maker to sell, citing rich valuation concerns. Analyst Harald Hendrikse noted the stock's 30% surge since December and expressed doubts about the sustainability of the current valuation, leading to the sell rating.

"We understand that in equity markets that are now more concentrated in ‘quality’ stocks than ever, Ferrari could easily run further," Hendrikse acknowledged, while highlighting the perceived rich valuation.

Street Views

• Seamus Fernandez, Guggenheim Securities (Bullish on GSK):

  "We see continued strength in GSK’s vaccine portfolio, with a strong foundation in Shingrix and growth potential in Arexvy as we predict expansion into ages 50-59 and third season data supporting repeat dosing... particularly if the overhang resolves from the series of lawsuits against its GSK’s heartburn drug, Zantac."

• Harald Hendrikse, Citi (Bearish on Ferrari):

  "However, after a 30% rally since December,... we see the current valuation as rich and downgrade to Sell."