Barclays Analyst Pens Open Letter To Gilead Board And Management

On Friday, Barclays analyst Geoff Meacham veered from his typical approach of addressing clients and chose to speak directly to management at Gilead Sciences, Inc. GILD. Meacham chose to structure his latest research note on the pharma giant as a letter to the company, which included five recommendations for ways the company could potentially boost its market valuation.

According to Meacham, market sentiment toward Gilead seems to be at a low point recently.

“The purpose of this letter isn’t to single out your company as one that has been mismanaged (it hasn’t); rather, it is to provide context for the current valuation and with five concluding recommendations, help carve a roadmap to a re-rating,” Meacham explained.

5-Step Process

Barclays believes Gilead management can be proactive by taking the following five steps:

1. Consider transformational M&A deals outside of the company’s core businesses.
2. Consider cutting costs in the hepatitis C business if the market continues to decline.
3. Give more clarity on the potential impact of the HIV franchise by providing guidance.
4. Consider taking a more aggressive approach to in-licensing/business development.
5. Consider shifting focus away from capital return and more toward reinvesting in the business via M&A and other potential growth measures.

Like most pharma stocks, Gilead has had a rough go of it in the past year, with shares now down 21.9 percent.

Barclays remains optimistic, however. The firm maintains an Outperform rating and a $90 price target for the stock.

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