Surging inflation has battered global markets this year. And despite pharmaceutical stocks tending to fare well in times like this, GSK (LSE: GSK) shares are down nearly 12% in 2022.

This fall has caught my eye. I think it presents a great opportunity to snag some cheap shares as we head into 2023 and to hold them for the long term. Here’s why.

GSK share price history

Before we get into it, let’s take a look at how the GSK share price has performed in recent times.

Inflation has peaked above 10% in both the UK and the US this year, meaning markets have taken a beating, including GSK. At this time last year, a share in the business would have set me back £16.24. Today, at the time of writing, it would cost me just £14.32.

Across the past five years, the stock has returned over 8% to shareholders, a significantly better return than that of the FTSE 100.

Is it time to buy?

So, is now the time to buy GSK? I believe so.

Its main attraction for me is the strong results the business has posted recently. For example, in its Q3 update, it announced sales growth of 9% to £7.8bn, fuelled by record sales of its shingles vaccine, Shingrix. On top of this, GSK also managed to reduce its net debt by £3.7bn in Q3 year on year to just over £18bn, while free cash flow came in at £723m.

With the macroeconomic headwinds that we’ve been facing, these are encouraging signs. As a result, GSK raised its full-year forecasts, with sales growth now expected to sit between 8% and 10%.

The business has also made great strides in streamlining its operations, predominantly through the Haleon demerger. The move will allow GSK to focus on developing vaccines and medicines. And with over 60 currently in development, this could boost profits in times ahead.

What also draws me to the stock is its dividend yield. At 7%, this isn’t inflation-beating. However, it does sit comfortably above the average of its FTSE 100 peers. With inflation predicted to persist in 2023, the cash generated from these dividends will come in handy.

The price-to-earnings ratio of around four also signals to me that the stock may be currently undervalued.

GSK concerns

The largest concern I have with GSK is rising inflation. As it continues to persist into 2023, this could see costs spike.

There’s also the persistent issue of potential legal action. The firm recently had a legal ruling thrown out after it was suggested that its Zantac heartburn treatment causes cancer. And while the outcome of this ruling was positive (at least for now), it highlights the potential risks and complications that come with investing in businesses such as GSK.

The verdict

Should I have some spare cash, I’ll be looking to pick up GSK shares as we head into the New Year. The business has posted some strong results during a tough year. And with its meaty dividend yield and low valuation, I like the look of the stock.

The post Why I’d buy GSK shares in 2023 appeared first on The Twelfth Magpie.

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Charlie Keough has no position in any of the shares mentioned. The Motley Fool UK has recommended Gsk Plc and Haleon Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Since Haleon’s (LSE:HLN) demerger with GSK and independent listing on the FTSE 100 last month, its shares have been falling. I can’t help but wonder if the Haleon share price falls into the category of a prime buying opportunity for my holdings with a view to a recovery? Let’s take a closer look.

Haleon share price journey

As a quick reminder, Haleon is now the largest standalone consumer healthcare goods business in the world. This comes after its demerger from global giant GSK. Some of its best known brands are staples in many consumer’s medicine cabinets, mine included, and include Night Nurse, Beechams, Piriteze, and Sensodyne to name a few.

So what’s the current state of play with the Haleon share price? Well, the shares listed last month for a price of 320p per share. As I write, they’re trading for 268p, which is a 16% decline in approximately a month. It is worth noting that the listing was the largest in Europe for close to a decade.

The investment case

Let’s start with some positives around Haleon shares then. I am buoyed by a few key elements. Firstly, the strength and brand power of some of its brands is unrivalled in the consumer healthcare market. These could help boost sales, performance, investor sentiment, and returns in the longer term.

Next, I noticed that a number of insiders have been buying shares since the Haleon share price listed. I find this positive, as who better to attest to the direction and potential of a business than those with an inside track. Haleon Chairman Sir Dave Lewis purchased £200,000 worth of shares just after the listing. Furthermore, two non-executive directors spent approximately £65,000 on shares too.

Finally, Haleon upgraded its forecast for its first full-year update when it released a half-year report at the end of July. The H1 update made for excellent reading, in my opinion. Revenue increased by close to 14% compared to the year previous, driven by organic growth, higher prices, and increased volumes. It also pointed towards the power-boosting performance of certain of its brands, namely Panadol, Advil, and Centrum. However, the positive report did not boost the Haleon share price.

So to some risks associated with Haleon shares then. Firstly, macroeconomic headwinds could have a longer-term impact on results and returns. Soaring inflation, the rising cost of materials, as well as the global supply chain issues could affect profitability and operations.

Next, I’m a bit worried by Haleon’s current debt levels. Debt is usually a red flag for me because it can impact levels of returns and future growth plans. I want to see further results and how the company plans to pay down debt, as well as growth plans to learn more.

What I’m doing now

I do believe that Haleon could be a good stock to buy for growth and returns in the longer term. Furthermore, analysts believe the Haleon share price will recover and increase steadily. I am keen to learn a bit more about the company’s direction, as well as its plan to combat current debt levels in the coming months and updates ahead, however.

The post The Haleon share price continues to fall! Is it now a prime buying opportunity? appeared first on The Twelfth Magpie.

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Jabran Khan has no position in any of the shares mentioned. The Motley Fool UK has recommended Haleon plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

2022 has been a tough time for investors. Markets have taken a beating as new 40-year high inflation levels and global conflicts have dented the economic outlook. Yet despite this, GSK (LSE: GSK) shares have been a beacon of light.

With the FTSE 100 seeing slight losses this year, the GSK share price is up over 8%. The last 12 months have seen the pharmaceutical giant’s stock rising by 24%.

The firm continued this positive momentum yesterday as it released an encouraging set of Q2 results. So, is this an indication I should be buying some shares?

The update

GSK shareholders will be pleased with the update the business provided yesterday.

Beating expectations, the company raised its full-year revenue and profit guidance. It now expects sales to grow between 6% and 8%, up from the prior target of 5%-7%. It also raised its guidance for adjusted operating profit, with it anticipated to come in somewhere between 13% and 15% as opposed to the previous 12%-14%.

A 13% growth in total sales year on year to £6.9bn was fuelled by record sales of its shingles vaccine Shingrix, while it also talked of the global strengthening of its R&D pipelines.

With tough economic conditions, this is a solid set of results.

Haleon spin-off

GSK has also been in the news recently for its recent demerger. Last week, the business split off its consumer healthcare business Haleon. Earning a spot on the FTSE 100, it’s the world’s largest standalone consumer health business.

The move should allow GSK to focus more on long-term developments of vaccines and medicines. And, as an added bonus, it’s also siphoned off a substantial amount of debt in the process.

Many spectators believe that the business has failed to perform in recent times. So this demerger offers an opportunity for it to become more streamlined. CEO Emma Walmsley spoke of the move as “a great catalyst” for a bright future for GSK. She also talked of the “Gordian knot” that has seen the business struggle previously.

While it’s still early for the reborn company, this move seems to make a lot of sense. As a potential investor, this is encouraging.

Is it time to buy?

So, should I be buying GSK shares today? Well, I’m tempted.

Apart from the above, I also like the stock due to the steadiness it can offer my portfolio in these uncertain times. And it’s proved its worth with its performance this year.

The products GSK sells are essential, making it fairly immune to the cost-of-living crisis we’re currently facing.

However, it could suffer should its cost rise as we head further into the year. And with supply chain issues always threatening, this could impact the business.

Despite this, I’d still buy GSK shares today. Its strong results show its resilience. And the demerger should hopefully bring a new lease of life for the firm.

The post After its latest results, are GSK shares a buy? appeared first on The Twelfth Magpie.

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• The CMC Markets share price is smashing the FTSE 100 in 2026. Is there an opportunity here?
• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?

Charlie Keough has no position in any of the shares mentioned. The Motley Fool UK has recommended GlaxoSmithKline. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.