The GSK share price is hovering near its highest level since January as Elliot Management pushes for more changes in the company. The GlaxoSmithKline stock ended the day at 1,438p, which is about 21% above the lowest level this year.
What happened: GSK, the giant company, has been under pressure that has seen it underperform many companies in its industry. The company plans to spin off its consumer products division in a bid to create value to shareholders. The company has already hired banks as it seeks to take that business public. However, some investors are not satisfied. Some want the company to separate into three companies. One will be the consumer division while the other one will be focused on vaccine development. The other company will have its traditional drugs company.
In a statement this week, Elliot Management said that the company should scrap its plan to take the consumer business public. Instead, it should consider an outright sale to a private equity group for about 40 billion pounds. The hedge fund said that in a 17-page letter in which it criticized the CEO, Emma Walmsley. The company responded to the letter saying:
“The legacy issues that Elliott identifies in its letter are not new. They have all been identified by GSK since 2017. The transformation programme has been designed to address all of these legacy issues, and more.”
The daily chart shows that the GSK share price has been in a strong upward trend in the past few months. That has seen the shares move to the 38.2% Fibonacci retracement level. It has also climbed to the 25-day and 50-day exponential moving averages (EMA).
Also, it has formed an inverse head and shoulders pattern, which is usually a bullish thing. Therefore, the stock will likely keep rising as investors target the 50% Fibonacci retracement level at 1,520p. However, a drop below the 38.2% retracement level at 1,440p will invalidate this prediction.
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