Jefferies On Gilead: 'We See Better Days Ahead'

The new year has brought relief to Gilead Sciences, Inc. GILD’s long-pressured stock, and one analyst projects a continuation in its U-shaped recovery.

The Rating

Jefferies analyst Michael Yee upgraded Gilead to Buy and raised the price target from $87 to $95.

The Thesis

Yee said he based the upgrade on upcoming pipeline catalysts:

• The potential February approval and launch of B/T/TAF for HIV.
• Unfactored Phase 3 GS-4997 data in 2019.
• The 2018 launch of Kite’s Yescarta.
• Kite’s scheduled release of BCMA myeloma data that “could surprise.”

Jefferies does not consider GlaxoSmithKline plc (ADR) GSK’s upcoming GEMINI data report a major threat, and Eli Lilly and Co LLY's catalysts are set to elucidate Gilead’s value, Yee said. 

“GILD has had it tough since 2015, but we believe the worst is generally moving behind them,” the analyst said. 

Jefferies expects low guidance accounting for HCV, but the product represents less than 20 percent of revenue, Yee said. Low Street expectations are already baked in, and the story is shifting from Hepatitis C to other page-turning franchises, he said. 

“We see better days ahead: after three years of decline, consensus EPS re-grows for 2020 [and beyond] and we want to own GILD coming out of the decline and back into the recovery period." 

Price Action

At the time of publication, shares were trading up 4.47 percent at $84.82. 

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