The GlaxoSmithKline (GSK) share price has been under intense pressure in the past few weeks as investors reflect on activists pressure on the company. The GSK share price is trading at 1,392p, which is about 9% below the highest level in August. The stock is about 20% above the lowest level this year.
InvestingCube's S&R Levels
In Sell Zone
Emma Walmsley under pressure
Activists have continued to pile pressure into GSK’s board and management in the past few months. The biggest activist disrupting the company is Nelson Peltz, the American billion who owns Trian.
In September, he was joined by another smaller British hedge fund that has taken a small stake worth about 10 million pounds. The fund, known as Blubell, is managed by Marco Taricco and Giuseppe Bivona. It was also responsible for the toppling of the CEO of Danone, the French food company.
The activist investors lament that the GSK share price has lagged that of its peers in the five years Emma has been on the jobs. As such, they argue that she should reapply for her job when her first term ends or when the company completes its separation.
Under Walmsley, the company is separating its business into two. One division will be made up of the company’s vaccine and drug company while the other will focus on consumer products. The company plans to list it in London, although the activist investors expect that it will fetch a bigger bid if it is just sold. Besides, there is a growing interest on UK companies.
Another issue the activists have with Walmsley is that she does not have a lot of experience in the pharmaceutical industry. They argue that having someone with this experience will help the firm compete with the likes of Pfizer.
GSK share price forecast
The GSK share price has declined in the past few days. The stock has fallen by almost 10% from its highest level in September. The sell-off is being supported by the 25-day and 50-day moving averages while the Relative Strength Index (RSI) has moved from a low of 30 to 45. It has also formed a head and shoulders pattern.
Therefore, at this point, the stock will likely break out lower as bears target the key support at 1,300p. This view will be invalidated if the price moves above 1,425p.