FTSE 100 round-up: Whitbread, GSK and Reckitt Benckiser

A City upgrade today helped to revive Whitbread (LSE:WTB) shares in a session when drugs giant GSK (LSE:GSK) maintained its progress thanks to a regulatory boost for one of its key vaccines.

The wider FTSE 100 index reached mid-afternoon in positive territory, despite falls for a number of ex-dividend stocks including Diageo (LSE:DGE) and Glencore (LSE:GLEN).

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Whitbread got a much-needed lift, gaining 118p to 2950p after Bernstein analysts raised the Premier Inn owner to Outperform with an improved target price of 3300p.

The bank’s support comes after a tough year for shares, having fallen by 18% to leave the leisure group on a forward-looking price multiple of 12.9 times earnings.

The company, which is due to report half-year results on 16 October, has been squeezed by rising wage costs as well as volatile trading conditions caused by factors including poor summer weather and squeezed consumer incomes.

Earlier this week, Deutsche Bank reiterated its Buy rating and 4,150p target price as it highlighted Whitbread’s various sources of self-help that include cost efficiencies and technology upgrades. 

GSK shares continued their strong week, rising 8p to 1659p as investors welcomed fresh regulatory support for Arexvy, its respiratory syncytial virus (RSV) vaccine.

The European Commission expanded Arexvy’s use to increased-risk adults aged between 50 and 59, having been authorised for over 60s since June last year. 

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Arexvy generated £1.2 billion in sales last year, the vast majority in the US where the product is available in major retail pharmacies. 

It is estimated that one-third of European adults in the 50-59 age range have at least one underlying medical condition that puts them at increased risk for RSV disease.

Sentiment towards GSK shares benefited yesterday following a positive courtroom development involving the long-running Zantac litigation.

The boost for GSK and three other firms came as Delaware’s supreme court agreed to review an earlier ruling that allowed the introduction of plaintiffs' expert evidence at trial. 

The claims that the now discontinued heartburn drug caused cancer have weighed on shares since summer 2022, despite a number of upgrades to company guidance in recent months.

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The shares have risen 11% since mid-July and now stand at a three-month high, although that’s still short of where they stood prior to the launch of Zantac litigation.

On the fallers board, the recent improvement by Reckitt Benckiser Group (LSE:RKT) was brought to a halt when JP Morgan removed its Overweight stance on the Dettol and Nurofen firm.

Reckitt was one of the worst performers in the FTSE 100 during the first half of the year, having been dragged lower by February’s worse-than-expected results and the loss of a court case filed against its Mead Johnson infant formula business in the US.

Efforts by chief executive Kris Licht to create a “sharper, simpler Reckitt” have revived fortunes since the end of July, leaving the shares 6% higher prior to today’s reverse of 47p to 4355p.