Raymond James Reviews Gilead Pipelines, Takes Bullish Stance On Pharma Stock

The biotechnology sector remains highly competitive, and investors willing to take on a stock with a high-risk, high-growth profile may want to consider Gilead Sciences, Inc. GILD, according to Raymond James.

The Analyst

Raymond James' Steven Seedhouse initiated coverage of Gilead Sciences with a Strong Buy rating and $93 price target.

The Thesis

A rundown of each segment Gilead addresses paints a bullish picture for the stock, Seedhouse said in the initiation note. They include:

• The HCV business, which should start showing signs of stability in the bottom half of 2018 and generate around $2.5 billion in revenue in a few years, Seedhouse said. The competitive threat from rival therapy Mavyret is "baked in" to the stock at current levels, he said. 
• The HIV business needed to see a strong launch with Biktarvy, and that's what occurred, the analyst said. HIV sales could peak at more than $20 billion annually by 2024, according to Raymond James, which implies a 5-percent compounded annual growth rate from 2017's $14 billion.
• Vemlidy for hepatitis B is performing well, although the pipeline is stale, Seedhouse said. Gilead could work on developing the HBV business in 2019 and beyond, he said. 
• CAR-T could be a growth driver for decades, Seedhouse said. 
• Key data readouts for Filgotinib in the bottom half of 2018 and beyond are expected to validate what could become a multibillion-dollar pipeline opportunity, according to Raymond James. 
• The NASH pipeline isn't as impressive as other areas, as rival companies boast better datasets, the analyst said. Nevertheless, Seedhouse forecast a 60-percent chance of Gilead seeing success in its STELLAR 3/4 trials.
• Gastric cancer is a "long shot," but investors are overlooking this area, the analyst said, adding that Gilead could see some success in its Phase 3 GAMMA-1 trial.

Price Action

Gilead Sciences shares were trading higher by 2.13 percent at $70.10 at the time of publication Thursday afternoon. 

Related Links:

With $36.7B In Cash, Bank of America Expects Gilead To Shop For Complements To Drug Pipeline

Cramer: Gilead Is Dead Money