The GSK share price has hit a 5-year low! Here’s why I’d buy today

first_img GlaxoSmithKline (LSE: GSK) has been out of favour with the market for some time. Its recent results did nothing to improve sentiment. Indeed, the GSK share price slumped to a five-year low last week.The stock looks very buyable to me right now. Here, I’ll discuss why I think it’s attractive, as well as the potential risks.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…Decline of the GSK share priceLittle more than a year ago, GSK’s shares hit a peak of 1,846p. From there to last week’s five-year low of 1,255p is a decline of 32%. That’s some swing in market sentiment!Results on 3 February produced the final push into multi-year-low territory. The GSK share price suffered a one-day fall of over 6%.Performance and outlookGSK’s headline numbers didn’t appear to me to merit such a drop in the share price. The company reported a 3% rise in sales and a 4% fall in adjusted earnings per share (EPS) at constant exchange rates (CER), “in line with guidance.”I think the market was disappointed by the company’s outlook for 2021. Management said it expects modest sales growth and “a decline of mid to high-single digit percent adjusted EPS at CER.” The 2022 outlook though, remained unchanged. The company continues to expect a “meaningful improvement in revenues and margins.”GSK’s dividend news may also have negatively affected the share price. The board maintained the 2020 payout and expects to maintain it in 2021. However, to support growth and investment, the company said it will be implementing a new dividend policy in 2022 under which “we expect that aggregate distributions for GSK will be lower than at present.”Looking longer termI think the market is perhaps being short-sighted. Near-term sales are expected to be anaemic and earnings subdued due to investment in R&D and the promotion of new product launches. The business hasn’t been entirely immune to the impact of the Covid-19 pandemic either. Finally, the preparations for demerging the consumer healthcare business in 2022 are also weighing on near-term performance.However, in the longer term, I see plenty to encourage me that GSK offers significant value at the current share price. The company reported “strong growth of new and specialty products” in 2020. Its biopharma pipeline has “over 20 assets now in late-stage clinical trials.” These include “10+ with potential peak annual revenues in excess of $1bn.”Meanwhile, the demerger of the consumer healthcare business, with its £10bn annual sales, will create a standalone global leader in the sector.Why I like the GSK share priceGSK’s shares are off last week’s low, being priced at 1,278p, as I’m writing. This is 11 times the group’s 2020 EPS.The consumer healthcare business contributed 25% to operating profit. I see no reason why this business shouldn’t command an earnings rating similar to consumer health and hygiene company Reckitt Benckiser.I can understand the market being hesitant to rate the pharma side of the business highly at the moment. After all, there’s a risk its pipeline may not be as productive or lucrative as management currently anticipates.However, if I rate the consumer business at a Reckitt Benckiser-style 20 times earnings, and the pharma business at the modest 11 times earnings, I arrive at an aggregate 13.25 times earnings, and fair value for the GSK share price of 1,536p.Despite the aforementioned pipeline risk, I see potential upside for GSK of over 20% excluding dividends. I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. Simply click below to discover how you can take advantage of this. Our 6 ‘Best Buys Now’ Shares FREE REPORT: Why this £5 stock could be set to surge Are you on the lookout for UK growth stocks?If so, get this FREE no-strings report now.While it’s available: you’ll discover what we think is a top growth stock for the decade ahead.And the performance of this company really is stunning.In 2019, it returned £150million to shareholders through buybacks and dividends.We believe its financial position is about as solid as anything we’ve seen.Since 2016, annual revenues increased 31%In March 2020, one of its senior directors LOADED UP on 25,000 shares – a position worth £90,259Operating cash flow is up 47%. (Even its operating margins are rising every year!)Quite simply, we believe it’s a fantastic Foolish growth pick.What’s more, it deserves your attention today.So please don’t wait another moment. Get the full details on this £5 stock now – while your report is free. G A Chester has no position in any of the shares mentioned. The Motley Fool UK has recommended GlaxoSmithKline. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.center_img Image source: Getty Images. The GSK share price has hit a 5-year low! Here’s why I’d buy today Enter Your Email Address Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. G A Chester | Monday, 15th February, 2021 | More on: GSK See all posts by G A Chesterlast_img read more