Jefferies Upgrades Gilead Sciences (GILD) to Buy; Sees Compelling Buying Opportunity
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Jefferies upgraded Gilead Sciences (NASDAQ: GILD) from Hold to Buy and maintains a price target of $91.00, saying they see a compelling buying opportunity in GILD at currently-depressed levels, with continued confidence in the LT HIV franchise prospects, expected HCV declines more than baked in, and potential for upside on strategic moves and/ or pipeline developments.
Analyst Brian Abrahams commented, " We remain confident in the prospects of GILD's HIV franchise, with effective switching strategies and low payer pushback likely enabling good LT sustainability even with modest lumpiness from genericization, and while competitor ViiV's dual regimen remains worth watching, believe the Street may at this point be overreacting to its potential threat. HCV is tracking below consensus expectations NT, but even if we were to make dramatic (40%) cuts to our alreadylowered go-forward Harvoni numbers, our DCF-based valuation would still be above where shares are currently trading (<7x P/E) - indicating the stock is already pricing in a highly bearish scenario for the franchise. We believe management is still very focused on building value and with any near-term strategic move could generate some accretion, and perhaps more importantly, improve sentiment. Lastly, while the pipeline programs have mixed levels of risk, we believe expectations are low, such that any positive signals from '5745, '9674, momelotinib, simtuzumab, '4997, and/or 9620 near-term readouts would help drive increased enthusiasm for their long-term growth opportunities beyond HIV and HCV. Our $91 DCF-based price target is unchanged.
Shares of Gilead Sciences closed at $76.89 yesterday.
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