Broker tips: GSK, EasyJet, AB Foods
By Iain Gilbert
Date: Tuesday 03 Jun 2025
(Sharecast News) - Analysts at Berenberg downgraded drugmaker GSK from 'buy' to 'hold' on Tuesday as it awaited upcoming product launches.
Berenberg said GSK has delivered 12% absolute share price performance year-to-date, the highest in the sector, but despite this, continues to trade roughly 30% below the value of its marketed drugs alone.
The German bank stated that a better-than-anticipated start to any of GSK's upcoming product rollouts could "reinvigorate investor interest" and begin to address 2028+ HIV patent expiry fears.
However, Berenberg expects investors to adopt "a show-me attitude" and noted that while GSK's valuation "remains unchallenging", it prefers Sanofi for pharma value investors.
"GSK trades on 8.7x 2026 adjusted earnings versus non-obesity European peers on 11.5x. On EV/NPV, GSK trades c15% below European non-obesity peers (0.70x versus 0.82x) and c30% below the value of marketed assets alone," said Berenberg, which reiterated its £16.00 target price.
RBC Capital Markets upgraded easyJet on Tuesday to 'outperform' from 'sector perform' and lifted its price target to 650.0p from 570.0p, saying it expects FY26 profit progress to surprise to the upside.
"We see easyJet as well positioned in an environment of strong UK travel demand, amplified fuel and FX tailwinds, and firm forecasts from FY26E," it said.
RBC said it also expects a stronger contribution from easyJet's own medium-term profit measures in FY26E (reducing winter losses, upgauging to lower unit-cost A320/1neos aircraft, Holidays growth).
RBC said that neither it nor consensus credit easyJet for delivery of its medium-term £1.0bn headline pre-tax profit target, so only above-expected progress will be required to prompt upgrades.
The Canadian bank said it now forecasts headline pre-tax profits of £791.0m, around 3% ahead of consensus estimates of £762.0m in FY26E.
Shore Capital has returned Associated British Foods to a 'buy' rating after a period of review, applauding the company for taking action to improve problem areas within the business.
The broker had placed the retail and food conglomerate under review following its first-half results in late-April, in which it reported that revenues fell 2% and adjusted pre-tax profit slumped 10%.
Shore Capital highlighted some areas of "robust progress", more than offset by a number of disappointments, including within UK bread (Allied Bakeries), Spanish sugar (Azucarera) and bioethanol (Vivergo).
"Post the update, we cut FY25F pre-tax profit and adjusted EPS by 5.8% to £1.684bn and 173.5p, far from ideal, which caused us to pause and reflect on the bull case," the broker said in a research note. "However, after a period of reflection, we see more to like than not in ABF's medium to long-term investment thesis, with high-quality assets, a very strong balance sheet, a multitude of growth opportunities and a building record of shareholder-friendly capital allocation."
Shore Capital also said that AB Foods was "now more assertively dealing with current problems (on the whole).
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