Episode Details

GSK plc (GSK) Q2 2026 — Turnover £8,409M +5% AER/CER, ahead of consensus. Core operating profit £2,800M +7% CER at a 33.3% margin; core EPS 50.5p +9% ($1.36 per ADS). But TOTAL operating profit fell 75% to £481M and Total EPS fell 69%, on a £1.3bn camlipixant write-off. Free cash flow £1,994M +77%. FY26 guidance reaffirmed. GSK reported two different quarters in one release and both are real. Core: turnover £8.4bn +5%, core operating profit +7% CER, core EPS 50.5p +9%, free cash flow +77%. Reported: total operating profit -75% and total EPS -69%, on a £1.3bn write-off of camlipixant. But the episode is really about one date GSK published itself: dolutegravir loss of exclusivity, 2028-2030 — 17% of group turnover, growing just 3%, against long-acting injectable HIV at £593M a quarter growing 34%. THE CALL: HOLD (3/5, CHEAP FOR A REASON, AND NOT QUITE CHEAP ENOUGH) — base-case value ~$48.0 vs ~$52.07 today. KEY METRICS: - 1 GSK ADS = 2 ordinary shares; GSK reports in GBP. All $ figures at GBP/USD 1.3447 (30 Jul 2026) - Turnover £8,409M +5% AER and CER — a beat - Core operating profit £2,800M +7% CER; core margin 33.3% (+0.6ppts) - Core EPS 50.5p +9% = 101.0p = $1.36 per ADS - Total operating profit £481M -75%; Total EPS 10.8p -69% = $0.29 per ADS - £1.3bn camlipixant impairment; programme discontinued after CALM-1/CALM-2 - Specialty Medicines £3,782M +14%; Vaccines £2,284M +8% (Shingrix £888M only +3%); General Medicines £2,343M -9% (Trelegy £775M -7%) - HIV £2,078M +10% = 24.7% of group turnover - Dolutegravir (Dovato/Tivicay/Triumeq/Juluca) £1,441M +3% = 17% of group — LoE 2028-2030 - Long-acting injectables Cabenuva £453M +33% + Apretude £140M +39% = £593M +34%, 80% of all HIV growth - Nucala £610M +23%; Jemperli £248M +27%; Ojjaara £187M +36%; Arexvy £192M more than doubled - Free cash flow £1,994M +77%; H1 £2,809M +54%; cash from operations £2,906M +19% - Total net debt £15,132M (from £14,453M at Dec-25) — rose despite £2.8bn H1 FCF, on £2,083M of M&A - Dividend 70p FY26 = 140p = $1.88 per ADS, ~3.6% yield, ~39% of core EPS - Accelerate Growth: £1.9bn annual savings by 2029 for £2.4bn cost; 20+ Phase III starts (was 10); 2031 sales >£40bn - FY25 base: turnover £32,667M, core EPS 172.0p, total EPS 141.1p, FCF £4,029M - Valuation: FY26E core EPS ~181p = ~$4.86 per ADS -> 10.7x forward; EV £92.9bn = 8.9x FY26E core operating profit - Our DCF at 8.5%: bear $30 / base $48 / bull $65 (base is $59 at 7.5%, $40 at 9.5%) - Reverse DCF: $52.07 implies 2.7% perpetual FCF growth, or an 8.1% discount rate at a 2.0% terminal What to watch: Bull: Cabenuva and Apretude compounding above 30% for another four to six quarters — the only thing that closes the dolutegravir gap on time — plus Shingrix re-accelerating out of low single digits. Add a clean Zantac resolution and fair value moves toward $60. Bear: dolutegravir turning negative before 2028; long-acting injectable growth decaying below 20%; or an appellate reversal on Zantac. Any two and fair value is in the thirties. Real buyers near $44. Also on YouTube: @ChargedAlpha DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.