The GSK (LSE: GSK) share price has gone up and down over the last decade, but it’s never really gone forwards.

It’s down 1.8% over five years and 10% over the last 12 months. That’s a dismal showing from a stock that was once seen as a FTSE 100 jewel.

As a contrarian investor, I decided GSK has suffered enough and added it to my self-invested personal pension (SIPP) last year. I quickly found myself down 20%.

So what’s gone wrong? Pretty much everything.

Can this stock shine again?

GSK’s drug pipeline has looked on the dry side for years and with blockbuster treatments coming off patent, CEO Emma Walmsley chose to prioritise R&D over the once mighty dividend.

Spinning-off consumer healthcare arm Haleon was meant to provide a fresh start, but didn’t. Legal action in the US over heartburn drug Zantac hammered the share price, but as soon as that was settled, new US President Donald Trump’s chose Robert F Kennedy Jr for his secretary of health. He’s expected to get tough on big pharma.

As GSK limped on, Walmsley came under pressure, with US activist investors questioning whether she’s the right person to drive the much-needed revival.

To rub salt in the wound, rival AstraZeneca has grown into the UK’s biggest company under CEO Pascal Soriot’s leadership. Its market cap is now £180bn, three times the size of GSK’s. Embarrassing!

So is anything changing? Perhaps. The GSK share price is up 15% in the past three months.

Full-year results, published on 5 February weren’t perfect, but they weren’t bad. Revenue rose 3% to £31.4bn, though vaccine sales dipped 4%. Encouragingly, HIV drug sales grew 13%, and oncology revenue nearly doubled. 

The board is more confident in its drug pipeline, raising its five-year sales forecast from £38bn to £40bn.

Crucially, GSK announced a £2bn share buyback, its first in more than a decade. That’s a strong signal of confidence from management.

The stock still trades at a low price-to-earnings (P/E) ratio of just 9.5, making it look temptingly cheap compared to global peers. Mind you, the P/E was lower when I bought in, and that didn’t give me any protection.

Dividends, buybacks and a low P/E

The dividend yield has crept back above 4%. GSK isn’t the mighty income machine of yore, but it’s picking up.

Analysts are cautiously optimistic. The 19 brokers covering the stock have a median one-year price target of 1,660p. If they’re right, that suggests a modest 10% rise from today’s 1,513. I’d take 10%, if it actually happened. It might just about pull me out of the red.

GSK remains a work in progress. The shares are in recovery mode today, but legal issues, political uncertainty, trade threats and a competitive drugs market could derail it at any moment.

With a long-term view, I think GSK shares look worth considering as part of a balanced portfolio. They’re cheaper than AstraZeneca, which has a P/E of 18.5 and yield of just 2%. But for a supposedly defensive stock, it remains risky.