RBC Capital Positive that Gilead Sciences (GILD) Didn't Acquire Otezla

August 26, 2019 7:46 AM

RBC Capital analyst Brian Abrahams reiterated a Top Pick rating and $91.00 price target on Gilead Sciences (NASDAQ: GILD) after Amgen agreed to acquire Otezla from CELG/BMY for $13.4B, not Gilead.

Abrahams called it a good 'non-deal' for GILD.

"Recall we had viewed Otezla as a potentially good fit for GILD, as it could have accelerated their entrance into the rheum/inflamm space ahead of the filgotinib launch , but only if they could have obtained it for less than $9.6B," Abraham comments. "While at a higher price Otezla might still be accretive for another company with a pre- existing rheum infrastructure, for GILD, our sensitivity analysis (available upon request) would have indicated a negative impact on our DCF-based fair value at such prices (-$2 at $11.2B, -$4 at $13.4B). As such, while GILD does lose an opportunity to easily bolt on a rheum/inflamm commercial infrastructure, we believe bidding the asset up further would have been a mistake for the company. We remain bullish on GILD given our optimism about their LT HIV revenue/cash flow generation and pipeline optionality."

For an analyst ratings summary and ratings history on Gilead Sciences click here. For more ratings news on Gilead Sciences click here.

Shares of Gilead Sciences closed at $62.51 yesterday.

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