Leerink Partners Downgrades Gilead Sciences (GILD) to Market Perform
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Leerink Partners downgraded Gilead Sciences (NASDAQ: GILD) from Outperform to Market Perform with a price target of $94.00 (from $112.00), saying HCV is eroding faster than expected.
Analyst Geoffrey Porges commented, "This sizable change in price target is driven by our updated forecast for the company’s HCV business, about which we have long been cautious but have now turned outright bearish. Our existing HCV estimates were already materially below consensus, and we now think that HCV revenues will decline faster, and farther, than we had previously estimated, and than consensus currently forecasts. Our Gilead HCV revenue forecast is reduced by 17% in 2017, and then by 20-25% in later periods. This amounts to a $2-2.5bn cut in our expected sales for each year after 2017. This lower forecast will inevitably be associated with margin erosion, and we have lowered our EBIT margin forecast by 310-480bps in each year after 2016. This still leaves our model with a 64% operating margin in 2020E, on $26bn in total revenue, which is materially below consensus."
Shares of Gilead Sciences closed at $80.62 yesterday.
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