eyeQ: FTSE 100 drug giant GSK triggers bullish signal
Experts at eyeQ have used AI and their own smart machine to analyse macro conditions and generate actionable trading signals. Here’s why it thinks GSK offers an attractive entry level.
2nd April 2025 10:28
Huw Roberts from eyeQ
“Our signals are crafted through macro-valuation, trend analysis, and meticulous back-testing. This combination ensures a comprehensive evaluation of an asset's value, market conditions, and historical performance.” eyeQ
- Discover: eyeQ analysis explained | eyeQ: our smart machine in action | Glossary
GSK
Macro Relevance: 76%
Model Value: 1,532.03p
Fair Value Gap: -6.76% discount to model value
Data correct as at 2 April 2025. Please click glossary for explanation of terms. Long-term strategic model.
Tariff day. It could be the biggest change in the global trading system for decades. Or it could be the opening salvo in a set of negotiations that lead to a compromise.
The only guarantee is we face huge headline risks later this evening, and markets will be noisy tomorrow as we digest the details. This is not a time for short-term tactical trading but taking a longer-term view.
Healthcare stocks have struggled of late. In the US that’s been because of fears of upheaval emanating from Robert F. Kennedy Jr’s planned reforms for the sector as he aims to Make America Healthy Again. Meanwhile, European pharmaceutical companies could be among those hurt by President Trump’s tariffs.
At the single stock level, GSK (LSE:GSK) has fallen nearly 9% in the last month.
But eyeQ shows macro conditions have been improving, and macro relevance is high. The bottom chart shows for long periods recently that company news has been more important than big picture stuff such as growth and inflation. But right now, macro explains 76% of price action and eyeQ model value has risen 11.7% over March.
The net result is GFK screens as 6.76% cheap to the broad macro environment. That’s sufficient to generate a bullish signal.
Again, given the headline risks around tonight, the prudent course of action is to wait and see how the dust settles after President Trump’s announcement.
But that doesn’t negate the need for investors to have a plan. And that plan should include having a ready shopping list of stocks you like for the medium term and ones that ideally offer attractive entry levels. From a macro perspective, GSK fits that description.
Source: eyeQ. Past performance is not a guide to future performance.
Useful terminology:
Model value
Where our smart machine calculates that any stock market index, single stock or exchange-traded fund (ETF) should be priced (the fair value) given the overall macroeconomic environment.
Model (macro) relevance
How confident we are in the model value. The higher the number the better! Above 65% means the macro environment is critical, so any valuation signals carry strong weight. Below 65%, we deem that something other than macro is driving the price.
Fair Value Gap (FVG)
The difference between our model value (fair value) and where the price currently is. A positive Fair Value Gap means the security is above the model value, which we refer to as “rich”. A negative FVG means that it's cheap. The bigger the FVG, the bigger the dislocation and therefore a better entry level for trades.
Long Term model
This model looks at share prices over the last 12 months, captures the company’s relationship with growth, inflation, currency shifts, central bank policy etc and calculates our key results - model value, model relevance, Fair Value Gap.
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