Bank of America Comments on Gilead Sciences After Research Results

Bank of America has published a report on Gilead Sciences GILD after HIV medication research results. In the report, Bank of America comments, "Our $43 price objective is based on 9.6x our 2012 non-GAAP EPS estimate and we believe pressures on the base business (U.S. and EU) will keep shares rangebound. Our DCF analysis shows approx $30/sh for the base business through 2018E, and $4-5 for the HIV pipeline, although we do have concerns that longerterm pricing for combination pills in the HIV market could erode meaningfully with the introduction of generic Sustiva in 2013 in Europe and 2015 in the US (WACC 8% and no terminal value). Shares are priced in line with its peers on a PE basis, and we believe that multiple expansion will be capped by lack of visibility on pricing and GILD's pipeline. However, GILD is increasingly focused on purchasing pipeline products through acquisitions in oncology, and is continuing to develop internally an HCV pipeline. Upside drivers are better-than- expected HIV market growth and success in its pipeline efforts. Downside drivers are worse-than-expected pricing pressures, disappointing clinical results, particularly QUAD data in 2H11 and HCV data over 2011." Bank of America rated Gilead Sciences Neutral with a price objective of $43.00. Gilead Sciences closed at $41.00 Friday.