Morgan Joseph Initiates Coverage on Gilead Sciences (GILD) with a Hold, Waiting for More Attractive Valuation

December 9, 2008 10:07 AM EST

Morgan Joseph initiates coverage on Gilead Sciences, Inc. (Nasdaq: GILD) with a Hold.

Morgan analyst says, "Strength in HIV and HBV. From Gilead, we expect solid sales growth in 2009 leading to 20% earnings growth, compared to Street growth estimates of 17%. Our optimism compared to Street estimates is due to three reasons: (1) we believe share gains of Atripla and Truvada against GSK's Ziagen are underestimated; (2) we expect Tamiflu to have a smaller drag on growth going forward; and (3) we expect Viread sales to resume growth going forward due to price increases and HBV market growth. As a result, our 2009 EPS estimate of $2.51 is 5% higher than the consensus mean EPS estimate of $2.38...While Gilead is well positioned to have strong EPS growth, and solidify its leading position in HIV and HBV treatment, we believe long-term concerns related to diversification remain. We believe the outperformance in the stock (flat compared to a -40.7% decline in the S&P) and its valuation reflects its superior growth prospects. We are initiating coverage of Gilead Sciences with a Hold rating and await a more attractive valuation or swifter diversification from Viread-based drugs to turn positive on GILD shares."

Gilead Sciences, Inc. (Gilead) is a biopharmaceutical company that discovers, develops and commercializes therapeutics in areas of unmet medical need.

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