Healthcare analysts are weighing in today on healthcare giants Valeant Pharmaceuticals Intl Inc (NYSE:VRX) and Gilead Sciences, Inc. (NASDAQ:GILD). While one analyst remains bearish on Valeant ahead of upcoming FDA advisory committee of Brodalumab for psoriasis, the other keeps his neutral stance on Gilead following the release of new HIV treatment guidelines. Let’s take a closer look:
Valeant Pharmaceuticals Intl Inc
In a research report issued Friday, Mizuho Securities analyst Irina Rivkind Koffler reiterated an Underperform rating on shares of Valeant with a price target of $11.00, after the FDA released briefing documents ahead of the Ophthalmic Drugs Advisory Committee meeting to discuss approval of Valeant’s Brodalumab for psoriasis.
Koffler wrote, “FDA’s division of Epidemiology calculated that Brodalumab has a rate of suicide that is 3-4x higher than that seen in clinical trials for other biologics. FDA will therefore consider a number of options and internal recommendations, ranging from issuing a complete response letter (asking for longer follow up of patients in a clinical trial), limiting the drug to second line utilization, Black Box Warning or serious risk language in the label, and/or REMS that we think could all negatively impact commercial viability of this compound amongst dermatologists. We highlight that Brodalumab would compete in a category with a number of other effective psoriasis agents like Taltz that have no REMS, and no suicidality issues.”
The analyst continued, “We had already been modeling sales of $430M in 2020, with 60% EBIT margins and a 50% profit split with AZN ($129M contribution to VRX in 2020). So even if this drug is not approved or delayed, we think the stock impact should be modest.”
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Irina Rivkind Koffler has a yearly average return of 24.9% and a 58% success rate. Koffler has a 26.7% average return when recommending VRX, and is ranked #19 out of 4060 analysts.Out of the 26 analysts polled by TipRanks, 8 rate Valeant stock a Buy, 13 rate the stock a Hold and 5 recommend to Sell. With a return potential of 157%, the stock’s consensus target price stands at $58.24.
Gilead Sciences, Inc.
In a research report released Friday, Jefferies analyst Brian Abrahams reiterated a Hold rating on shares of Gilead, with a price target of $97, after new HIV guidelines were released from IAS and DHHS, and IAS (though not DHHS) contains the first prioritization of TAF-based over Vireadbased regimens.
Abrahams noted, “We see this as an incremental positive for GILD, helping them continue to convert pts to longer life-cycle TAF-based cocktails NT, and potentially helping protect vs. competition LT. Still, other competition remains worth watching and we expect GILD to trade in line pending greater growth visibility.”
In other words, “We view this as a positive which would help switching to TAF-based regimens and help protect against generics and hybrids, though it may be important for DHHS guidelines to “catch up” over time to fully standardize the prioritization for TAF-based regimens.”
According to TipRanks.com, analyst Brian Abrahams has a yearly average return of 2.3% and a 46% success rate. Abrahams has a 21.5% average return when recommending GILD, and is ranked #1306 out of 4060 analysts.
Out of the 22 analysts polled by TipRanks, 15 rate Gilead Sciences stock a Buy, while 7 rate the stock a Hold. With a return potential of 30%, the stock’s consensus target price stands at $113.25.