William Blair Bullish on Two Pharmaceuticals Giants: Celgene Corporation (CELG) and Gilead Sciences, Inc. (GILD)

John Sonnier of William Blair weighs in on pharmaceuticals giants Celgene Corporation (NASDAQ:CELG) and Gilead Sciences, Inc. (NASDAQ:GILD) in light of earnings and a competing drug entering the market, respectively. The analyst remains bullish on both companies thanks to their strong commercialized products.According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst John Sonnier has a yearly average return of 4.3% and a 45.5% success rate. Sonnier is ranked #739 out of 3622 analysts.

Celgene Corporation

Celgene announced fourth quarter earnings on Thursday, posting earnings per share of $1.18 on revenue of $2.56 billion. Earnings missed estimates of $1.22, though revenue was in-line with expectations. Sonnier weighed in on the company after the post-earnings conference call with several highlights.

First, Sonnier is optimistic regarding Celgene’s position as the company enters 2016. He points to the company’s key products, Pomalyst/Imnovid for myeloma and Otezla for plaque psoriasis. The analyst explains that the company’s guidance for 1Q16 adjusted diluted EPS between $1.27 and $1.30 and FY2016 EPS between $5.50 and $5.70 is “conservative and entirely volume-based.” Sonnier continues, “We believe that upward revisions in the current market environment could serve as a meaningful catalyst to improving investor sentiment.”

Sonnier is bullish on Celgene’s pipeline, touting it as “the best pipeline in the biotech industry, which has the potential to drive continued growth through the next decade.” Near-term, the analyst anticipates several commercial and regulatory catalysts from Revlimid, CC-122, and Abraxane. As a result, Sonnier reiterates his Outperform rating on Celgene though he does not provide a price target.

According to TipRanks, all 13 analysts covering Celgene remain bullish. The average 12-month price target between these 13 analysts is $153.45, marking a 53% potential upside from where shares last closed.

Gilead Sciences, Inc.

Sonnier weighed in on Gilead on Friday after Merck gained FDA approval for a competing drug. Gilead is known for its Harvoni and Sovaldi regimens that dominate the hepatitis C market. Together, these two drugs make up more than half of Gilead’s revenue. On Thursday, Merck’s Zepatier regimen was approved to treat hepatitis C and will retail at a much lower price than Gilead’s counterparts.

Despite this competition, Sonnier remains confident in Gilead’s hepatitis C franchise, explaining, “We continue to believe Harvoni is the best-in-class treatment.” Harvoni treats 4 different hepatitis C genotypes while Merck’s drug treats 2 genotypes. Additionally, due to Zepatier’s virologic failure and relapse rates, specific types of hep C patients “could experience an eightfold higher chance of virologic failure or relapse when taking Zepatier versus Harvoni.” Sonnier highlights Harvoni’s 98% cure rate and its simple dosing schedule.

Furthermore, doctors must run additional tests on patients taking Zepatier, which may deter prescribing it. Lastly, Sonnier is not intimidated by Merck’s inexpensive drug pricing as it is “priced in the range of other HCV treatments on the market.” Overall, Sonnier continues to believe that Harvoni is the dominant hepatitis C drug on the market and reiterates an Outperform rating on Gilead without providing a price target.

According to TipRanks, 10 analysts are bullish on Gilead while 2 remain neutral. The average 12-month price target between these 12 analysts is $126.82, marking a 53% potential upside from current levels.


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