GlaxoSmithKline PLC (LON:GSK) has been downgraded to ‘neutral’ from ‘buy’ by analysts at UBS as the bank said investors should “remain in a holding pattern” until more is known about the group’s planned separation of its consumer health business.
In a note on Thursday, UBS also cut its price target for the FTSE 100 pharma group to 1,440p from 1,730p, saying they knew “little about future cashflows” in the remaining business and that there were “few clinical catalysts” for the first half of 2021.
The bank added that while GSK saw the separation as an “opportunity to reset its debt” there were also questions about what would happen to its dividend, which in turn were difficult to answer without knowing details of future cashflow.
UBS also highlighted other risks to the business including the timing of the separation, the prolonging of which would be “frustrating” and allow questions over the dividend to persist unless “clear post-separation dividend guidance” was given.
Shares in GSK were down 1% at 1,380.4p in late-morning trading.