Post Q3 Earnings, Jefferies Analyst Is Optimistic About Gilead Sciences (GILD)

By Carrie Williams

jefferies-is-positive-post-gileads-earningsResearch-based pharma company Gilead Sciences Inc. (NASDAQ: GILD) reported a mixed Q3 results last Thursday, with revenue of $7.5 billion (-9.5% YoY) vs the street estimates of $7.0 billion, and EPS of $2.75 vs the estimated EPS of $2.86. Jefferies analyst Brian Abrahams today lowers the price target from $95 to $91 while maintaining his Buy rating on the stock. The new PT is an upside of 25.63% from the current price of $72.43.

Abrahams, however, believes that the current pipeline of Gilead is underappreciated. He indicated optimism regarding the phase III data of the two studies of Jak inhibitor momelotinib, a potential myelofibrosis (MF) drug, which is expected to be released any day. GILD is conducting two phase IIIs , head to head [HTH] vs. Jakafi, and another vs. BAT in anemic/thrombocytopenic pts. The data is anticipated to be top-in-line and to show spleen/ symptom benefits that are adequate to warrant approval, as well as a reduction in transfusion dependence, giving it some role in the MF treatment paradigm.

Even though competitor drug Jakafi from INCY is well placed at the moment due to entrenchment and OS benefits, the advantage bestowed by momelotinib in anemia/thrombocytopenia and transfusions over Jakafi is expected to provide GILD enough room in the market. Brian Abrahams believe that the WW momelotinib sales could reach ~$450M by 2025.

In addition to momelotinib, company’s current pipeline also include Eleclazine, which is intended for the treatment of heart disease long QT-3 syndrome, as well as HIV and hep C candidates.  GILD is also focusing on nonalcoholic steatohepatitis (NASH). In addition, biotechnology stocks have almost reached their bottom and are expected to bounce upwards soon. Overall, positive outlook regarding GILD’s HIV drugs as well as the company’s underappreciated pipeline makes it a biotech stock worth chasing.

Based on the analysts covering the stock with ratings from the past three months, the consensus rating on GILD is a Moderate Buy. GILD has an average price target of $100.55 among the analysts according to data by TipRanks, the price is an upside of 38.82% from the fastest close.