Analyst Jason Kolbert from Maxim Group expressed his concerns about Gilead Sciences, Inc. (NASDAQ:GILD) after it announced its second-quarter earnings on Monday. The report showed a YoY decline in revenues of $7.8 billion and a decline in its EPS by $0.34. These declines were driven by weaknesses in its HCV franchise.

Gilead is operating with several challenges within its HCV business that are pushing down its revenues. Firstly, Japan instituted a mandatory price reduction for drugs that had over $1.8 billion in sales. Furthermore, Gilead has been experiencing a decline in demand in its HCV business in the EU and the U.S. Management stated that investors “should expect new patients to start decline gradually until ‘an equilibrium will eventually be hit’.”

Concerns about HCV led Gilead to lower its guidance for 2016. Its Net Product Revenues range was lowered from $30-$31 billion to $29.5-30.5 billion.

Although Gilead had a concerning quarter its cash flow remains strong, which is important for a company that relies on R&D. It generated cash flow from operations of close to $5 billion dollars this quarter. Its total cash flow is now $25 billion, $1 billion of which was used to repurchase stock.

Kolbert is still optimistic about Gilead in the long term. He expects Epclusa, a new HCV drug that was just approved in the U.S. and EU, to help Gilead maintain its market share in the HCV space. He also expects “to see Epclusa cannibalize some revenues from Harvoni and Solvaldi.” Kolbert feels that Gilead’s strong cash flow and balance sheet will allow the company to make an acquisition as “the company struggles with success and big numbers to support its robust but slowing growth rate.”

The analyst maintained his Hold rating for Gilead with a price target of $88.55, marking a 9% increase from current levels.

According to TipRanks, the analyst has a yearly average loss of 14.9% and a 30% success rate. The analyst has a 4.5% average return when recommending Gilead, and is ranked #4,002 out of 4,083 analysts.

TipRanks shows that out of the 18 analysts who rated Gilead in the last 3 months, 56% gave a Buy rating and 44% gave a Hold rating. The average 12-month price target for the stock is $111.83, marking a 37.98% upside from current levels.