I’ve been keeping a close eye on the FTSE 100 in recent months. The large cap index has climbed 7% higher in 2024 but it hasn’t all been plain sailing.

In fact, there are several top stocks under pressure this year. But one pharmaceuticals giant in particular that has caught my eye and could be entering my Buy zone.

Pharma group under pressure

GSK (LSE: GSK) is one of the FTSE 100 stocks that’s on my radar. It’s a famous industry name and one of the largest pharmaceuticals and biotechnology companies in the world.

Despite its status, the GSK share price has been under pressure, falling 26.2% since May 15 to sit at 1,335p per share.

One of the biggest factors weighing on the group’s valuation has been ongoing lawsuits surrounding its heartburn drug Zantac in the US.

However, GSK has agreed a $2.2bn settlement to end most of these lawsuits with a related £1.8bn charge booked in Q3 this year.

CEO Emma Walmsley said: “[We] resolved the vast majority of Zantac litigation in the quarter, to remove uncertainty and so we can focus forward. All this means we are on track to deliver our 2024 guidance.”

Despite seeing its share price slide in 2024, GSK is still one of the biggest companies in the FTSE 100 with a market cap of £56bn.

Recent performance

GSK reported £8.01bn in Q3 sales back in October which marginally missed analyst estimates of £8.05bn. However, there were some bright spots with core earnings per share (EPS) beating estimates and climbing 5% to 47.9p.

That was driven by 19% growth in Speciality Medicines sales thanks to strong oncology and HIV sales. Another aspect I really like is GSK’s growing pipeline with 11 positive phase-3 trials so far.

However, increasing competition in the respiratory syncytial virus (RSV) market, driven by a US advisory committee’s regulatory guideline revisions, has put a bit of a dampener on the growth outlook.

Valuation

GSK has a price-to-earnings (P/E) ratio of 22 right now. For some context, the Footsie is valued at around 14.5 times earnings.

That premium in itself doesn’t necessarily turn me off. P/E ratios vary by industry, and pharma companies can command a higher premium given the industry’s non-cyclical nature.

I’m more interested in how GSK stacks up against peers. AstraZeneca is a natural comparison as another major global player in the Footsie.

The company is trading at 32.5 times earnings with a £164bn market cap. AstraZeneca has been growing revenue and earnings, driven by organic growth and a number of key acquisitions in recent years.

In fact, management wants to grow total revenue from £45.8bn in 2023 to £80bn by 2030. That’s an ambitious plan, but one that could pay off handsomely for investors.

The verdict

I don’t think GSK is out of the woods yet. Confirmed full-year guidance including sales growth of 7% to 9% and core EPS growth of 10% to 12% certainly helps.

My target multiple for the FTSE 100 stock is 20 times earnings. I think that would compensate me for the risks while being a significant discount to AstraZeneca.

For the moment, I’ll be saving my money so I can buy if GSK falls into my Buy zone.