Yesterday, Gilead Sciences, Inc. (NASDAQ:GILD) held an analyst event where management hosted a sell-side meeting at the J.P. Morgan Healthcare Conference in San Francisco. In light of takeaways from the event, analysts weigh in with their insights.
The healthcare giant noted that it is still difficult to estimate HCV patient starts, but is still seeing a downward trend. Moreover, Gilead noted that it had to take some price concessions for 2017 to maintain position on formulary, but is comfortable with its pricing position.
Goldman Sachs analyst Terence Flynn commented, “GILD noted that hepC market dynamics continue to evolve and there remains a high degree of uncertainty regarding the forward outlook. Management specifically pointed to four variables that influence revenue — patient starts, competitive environment, duration of treatment and price. They noted that they expect patient starts will be lower in 2017 than 2016 as the most severe patients have been now treated. GILD stated that they are in “great shape” regarding formulary access for their hepC drugs in 2017, but they did have to make some “reasonable” price concessions. On the competitive environment they noted this will likely depend on ABBV’s new regimen and strategy in 4Q17. We continue to model declining hepC sales — $13.3bn in 2017 vs. $15.2bn in 2016.”
Flynn rates GILD a Neutral, with a price target of $81, which implies an upside of 10% from current levels.
In addition, BMO analyst Ian Somaiya noted, “Our meeting with management confirmed our expectations for declines in HCV sales in 2017 as treatment rates slow and in 2018 as competition takes share, supporting our below consensus estimates. However, we continue to expect HIV sales to benefit from launch of bictegravir (data in 1H17) and adoption in PrEP. Calls for management to step up BD have been heard but deal structure could increasingly take the form of collaborations that may provide it access to sought after oncology and immunology products — large transformative deals are unlikely near term.”
Somaiya rates GILD a Market Perform with a price target of $88, which represents a potential upside of nearly 19% from where the stock is currently trading.
According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Terence Flynn and Ian Somaiya have a yearly average return of 19% and 11.5% respectively. Flynn has a 72% success rate and is ranked #337 out of 4340 analysts, while Somaiya has a 53% success rate and is ranked #324.