GlaxoSmithKline Recent Pullback Delivers A Healthy Opportunity To Buy

Argus said in a note on Wednesday that the recent weakness in GlaxoSmithKline plc (ADR) (NYSE: GSK) shares offers a buying opportunity.

The firm noted that as against the 1 percent gain by the broader market, the company's shares have fallen 8 percent over the past quarter. As such, the firm maintained its rating at Buy, with a price target of $50.

In pre-market trading, shares of GlaxoSmithKline were up 1.14 percent to $39.77.

Analyst John Eade said GlaxoSmithKline has lagged amid pricing pressure and generic threats to its respiratory blockbuster Advair/Seretide, despite most companies in the Big Pharma group moving beyond the patent cliff phase and beginning to grow.

With the company's management taking steps to leverage its core competencies, the analyst said the recent results show improvement. The analyst believes the appointment of Emma Walmsley as the new CEO will advance the process.

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Argus indicated the company is in the early stages of a new phase in its development. As a means to focus on its strengths, namely vaccines and consumer healthcare, the company completed a three-part deal in 2015, selling its oncology business to Novartis AG (ADR) (NYSE: NVS), buying Novartis' vaccines business and combining its consumer healthcare unit in a joint venture with Novartis' consumer healthcare business.

"In the meantime, the shares offer a value opportunity, in our view, along with an attractive dividend yield of about 5%," the firm said on valuation.