Berenberg Starts Gilead Sciences (GILD) at Buy, $112 PT
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Berenberg initiates coverage on Gilead Sciences (NASDAQ: GILD) with a Buy rating and a price target of $112.00.
Analyst Laura Sutcliffe commented, "After a three-year period when revenues tripled, driven by sales of Gilead’s Hepatitis C (HCV) drugs which revolutionised care in this area, earnings are set to flatten. HCV sales have peaked. Faster-than-expected drop-off has fuelled disappointment and a fall in the share price of 22% ytd. We believe that the shares have retreated too far and are now meaningfully undervalued."
She added, "The Hepatitis C business will remain highly cash generative: HCV sales grew from nothing in 2012, to over $19bn last year. This represents peak sales as many of the sickest patients have now been treated, but a large pool remains. We forecast a steeper decline than consensus but still see the HCV franchise bringing in over $10bn in 2019. This part of the business is very profitable with margins over 90% and we think it can generate $49bn of cumulative EBIT between 2016 and 2020."
Shares of Gilead Sciences closed at $78.05 yesterday.
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