J.P. Morgan Maintains Overweight On Gilead Sciences Following Earnings; Sees 17% Upside

J.P. Morgan analyst Cory Kasimov joined the crowd today and maintained an Overweight rating on Gilead Sciences (NASDAQ:GILD) with a price target of $116, following the company’s fourth-quarter results that while strong, were not without a curve ball, according to the analyst.

Kasimov explained, “Namely, GILD’s expectation for the gross-to-net on HCV products to be ~46%, more than double the 22% at the end of 2014, caught just about everyone by surprise. These discounts seem to be largely contingent on increased patient volumes that should help offset the impact in the near term but again call into question the HCV tail. The volume offset is highlighted by 2015 net product sales guidance of $26-27B vs. our previous $26.7B estimate.”

Furthermore the analyst wrote, “Assuming patient volumes do in fact make up for discounts (even if not completely), the bottom line is that GILD’s HCV business will still be a significant source of revenue and earnings growth as well as cash flow generation. The key question in our minds remains how GILD leverages HCV into the next phase of the company’s evolution. On that front GILD was clear that its newly announced dividend and aggressive share repo program won’t impact its appetite for BD/pipeline investment.”

Gilead Sciences, Inc., a biopharmaceutical company, discovers, develops, and commercializes medicines for the treatment of life threatening diseases in North America, South America, Europe, and the Asia-Pacific. 

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