While Valeant Pharmaceuticals Intl Inc (NYSE:VRX) and Gilead Sciences, Inc. (NASDAQ:GILD) remain biotech giants, they are no longer the fan-favorites they used to be. Analysts from brokerage firms Cancaccord and Maxim remain neutral on both companies as Valeant releases weak earnings and Gilead navigates a patent lawsuit.

Valeant Pharmaceuticals Intl Inc

Valeant can’t seem to catch a break as the embattled pharmaceutical company released weak first quarter earnings, adding insult to injury following months of litigation on multiple fronts and a swift CEO swap. In light of the earnings report, Neil Maruoka of Cancaccord weighs in on the company and the challenges that lie ahead.

On the earnings front, Maruoka explains that quarterly revenue was in-line with his expectations at $2.37 billion, though adjusted EPS of $1.27 fell below his expectations of $1.43. Valeant also lowered 2016 revenue guidance to the range of $9.9 billion to $10.1 billion, down from the previous range of $11.0 billion to $11.2 billion. The analyst views this as new CEO Pappa’s move to “hit the reset button on expectations at the beginning of his tenure.”

The analyst points out several challenges presented by the company’s partnership with Walgreens, explaining; “The transition to Walgreens has not come without some significant bumps, including much lower ASPs across this segment. However, the company believes that this issue is ‘fixable’ and that it can return the business to growth.” Maruoka continues that this “slower rebound from a weak Q1 has led to a much weaker outlook for the year.”

As Valeant struggles to regain its footing, Maruoka reiterates a Hold rating on Valeant with a $40 price target, marking a 60% potential increase from current levels.

According to TipRanks, 33% of analysts are bullish on Valeant, 48% are neutral, and 19% are bearish. The average 12-month price target is $42.79, marking a 74% potential upside.

Gilead Sciences, Inc.

Gilead received news yesterday that a judge has reversed the order for Gilead to pay Merck $200 million in a drug-patent case after concluding that Merck’s in-house lawyer was deceptive. Jason Kolbert of Maxim Group sheds light on the update and its implications for the company.

Gilead has long ruled the market for hepatitis C drugs with its flagship products, Harvoni and Sovaldi, which comprise more than half of its revenue. Recently, Merck entered the hep c market with Zepatier, which is a less-expensive alternative to Gilead’s offerings. The ensuing lawsuit, filed by Merck, claims that Gilead infringed on Merck’s patents to produce its own hepatitis C drugs.

Kolbert summarizes the impact of this latest development, explaining, “The jury originally awarded a 4% royalty rate on $5 billion in sales (vs. the $20 billion that was being sought). For conservatism we assumed a worst case scenario of a 10% royalty and a one-time payment of $2 billion (payable in 18 months).” The analyst is removing his price target pending further clarity, but notes that the reversal decision reduces IP risk.

Kolbert reiterates a Hold rating on Gilead and has removed his price target until there is more clarity on the future of this case.

According to TipRanks, 57% of analysts are bullish on the stock while 43% are neutral. The average 12-month price target is $114.42, marking a 30% potential upside.