Under £19, which is why GSK’s share price looks cheap to me at anywhere under £42.92

Years of doubt are over GSK(LSE: GSK)’s product pipeline and growth prospects overvalue its share, in my view.

But a 43% drop from the April 9 one-year low of £12.61 suggests sentiment may finally be changing.

But because value is not the same as price, I think the stock still has a lot of room to run.

So how high can they go?

What will drive income growth?

The potential for profit growth increases over time in a company’s value. For GSK, I think the next phase will come from three areas.

First, it follows the division of 2022 Haleonnow operating as pureplay pharma and vaccines business. That clean structure should support better margins and predictable cash generation.

Second, its goals are portfolio – led Shingrix and the principle of respiration Arexvy – continues to deliver strong, repeatable cash flow. In Q3 2025, Shingrix sales jumped 36% year-on-year to £0.3bn, while Arexvy up 13% to £0.8bn.

Third, the late-stage pipeline is finally producing meaningful candidates. The Q3 update highlighted the launch of 15 major pipelines between 2025 and 2031. Each has a peak annual sales potential of more than £2bn.

A risk to GSK’s profits is the US tariffs applied to pharmaceutical exports. This follows the recent statement by US President Donald Trump that the UK will face a 10% tariff. “all goods” as of February 1, up 25% since June. He said these measures will last until an agreement is reached on the future of Greenland.

That said, the US-UK deal reached in December 2025 exempted pharmaceuticals – including GSK products – from these measures.

Before the statement, GSK raised its expected profit growth guidance to 6%-7% (from 3%-5%). It did the same for underlying operating profit growth: to 9%-11% (from 6%-8%).

Analysts’ earnings growth forecasts a modest 7% a year through 2028.

How high can stocks go?

To measure the value of GSK, I performed a discounted cash-flow (DCF) analysis. This estimates the fair value of a company by projecting its future cash flows and discounting them to today. It does this using a value that reflects the risk of ownership.

The present value of the next 10 years of cash flows is then added to the final stock price, giving the total equity value. Divide that by the number of shares outstanding, and we have an estimate of what each share is worth.

In the case of GSK, I used a discount rate of 7.1%, and a perpetual growth rate of 3% (the five-year average of the UK 10-year yield). Other DCF models may use different inputs, of course, which may produce different estimates – lower or higher.

However, based on these numbers, my modeling suggests that GSK shares are 58% undervalued at their current price of £18.48.

That means a fair value of £42.92 — more than double where the stock is trading today.

And because asset prices can trade back to their fair value over time, it suggests a powerful buying opportunity to consider today if that DCF assumption holds.

My investment idea

I bought GSK shares years ago, based on their strong earnings growth potential and deeply discounted valuation.

Since none of these features have changed, I intend to add to my position soon.