Following the approval of hepatitis C (HCV) medication Epclusa, two analysts weighed in on Gilead Sciences, Inc. (NASDAQ:GILD) with differing views. While one analyst remains on the sidelines due to predicted mediocre revenues from the drug, the other believes the company’s innovation in HCV reaffirms its dominance in the market and predicts long-term gains.
Analyst Brian Abrahams of Jefferies provided his insights on GILD following FDA approval of one of the company’s HCV medications, Epclusa. The analyst views the decision as “an incremental positive for the company as it continues to bolster its antiviral franchise.” He also notes that Epclusa is more catered to GT-2/3 patients compared to Sovaldi, Gilead’s most popular HCV drug that is mostly used for GT-2/3 patients. The analyst expects the drug to be more popular outside of the U.S, “where genotyping is more of a barrier.” However, the analyst does not believe Epclusa sales will provide any meaningful near-term upside to revenue or shares due to its lower cost than popular and time-tested drugs Sovaldi and Harvoni.
The analyst reiterates a Hold rating on shares with a $96 price target. While the “approval reinforces GILD longevity in the HCV space with shorter, accessible and more competitive treatment regimens,” the analyst remains on the sidelines for GILD due to “HCV pricing pressure and pending further clarity on HCV patient flows.”
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Brian Abrahams has a yearly average return of 0.3% and a 36% success rate. Abrahams has a 21.5% average return when recommending GILD, and is ranked #2101 out of 3990 analysts.
Credit Suisse analyst Alethia Young also commented on Gilead post Epclusa approval. The analyst spoke to the company regarding the pricing of the drug and provided several takeaways. First, she notes that “the pricing strategy makes sense” for Epclusa, which is priced at $74.6K compared to Sovaldi at $147K. The analyst explains, “Notably, Epclusa represents a significant value for GT3 patients who may be using 2 branded drugs or longer durations of Sovaldi treatment.” Young also mentions that “40% of global patients are GT 2 and 3.”
While the analyst does not predict near-term revenue gains from Epclusa, she is optimistic regarding Harvoni, another HCV drug by Gilead, and believes it will “continue as the lead treatment for GT1 patients.” Related, the analyst states that GILD is not positioning Epclusa for G1 patients. Although the analyst predicts future pricing pressure for GILD regarding its HCV profile, the analyst expects GILD to maintain 80% market share long-term. She states, “We think Gilead’s innovation in HCV helps them maintain the competitive leadership edge as other companies develop pangenotypic regimens or nuke-based regimens.”
The analyst reiterates an Outperform rating on the company with a $120 price target.
According to TipRanks, out of the 14 analysts who have rated the company in the past 3 months, 57% gave a Buy rating while 43% remain on the sidelines. The average 12-month price target for the stock is $113.64, marking a 38% upside from where shares last closed.