Leerink Partners: Buy Gilead Sciences, Inc. (GILD), Be Cautious With Celgene Corporation (CELG)

After joining Leerink Partners in November, analyst Geoff Porges reinitiated coverage yesterday on major healthcare stocks. Among the equities in focus are pharmaceutical giants Gilead Sciences, Inc. (NASDAQ:GILD) and Celgene Corporation (NASDAQ:CELG).

Gilead Sciences, Inc.

Geoff Porges reinitiated coverage on shares of Gilead Sciences, with an Outperform rating and price target of $125, which implies an upside of 44% from current levels.

Geoff  emphasized his bullish stance on Gilead, noting, “Our recommendation is based on the stock’s compelling valuation, and our altered view of the outlook for the company’s HIV business, which we see as having the potential to continue to grow through the end of our 10-year forecast period, based on successful commercialization of its new TAF-based HIV combinations, and then the likely introduction of a new blockbuster combination containing Vx9883 — its internally developed second generation HIV integrase inhibitor. This non-consensus view (its key legacy HIV product Viread loses patent protection in 2018) is based on the successful development and early commercialization of Genvoya, its first TAF-based HIV combination, the rapid progress to market of its additional TAF-based combinations, positive feedback from the market about those products, and the emergence of Vx9883 as a viable next leg to the franchise.”

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Porges has a yearly average return of -1.4% and a 22.2% success rate. Porges has a -16.1% average return when recommending GILD, and is ranked #2203 out of 3621 analysts.

Out of 17 analysts polled by TipRanks in the last 3 months, 15 rate Gilead stock a Buy, while 2 rate the stock a Hold. With a return potential of 40.52%, the stock’s consensus target price stands at $121.80.

Celgene Corporation

In addition, Porges reiterated coverage on shares of Celgene, with a Market Perform rating and price target of $129, taking a cautious approach in viewing Celgene’s future.

Porges stated, “Despite the upside to our target, we are taking a “wait and see” approach to the company’s extensive pipeline investments, recent management changes, and diversifying collection of collaborations. The validation of this strategy and the value of the assets will mainly come from Phase II and III trial read outs that are concentrated in 2017. In the meantime the company will need to sort through, prioritize and fund a broad portfolio of assets in sometimes overlapping indications and settings. The company’s near-term operating results are also facing headwinds, from typical early-year seasonality, as well as currency and channel inventory effects.”

Out of the 24 analysts polled by TipRanks, 21 rate Celgene Corporation stock a Buy, while 3 rate the stock a Hold. With a return potential of 49.4%, the stock’s consensus target price stands at $152.32.

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