Cowen More Confident on Gilead Sciences, Inc. (GILD) Following Price Increases

Cowen analyst Phil Nadeau is weighing in on Gilead Sciences, Inc. (NASDAQ:GILD) after the rumor mill was churning with reports that the biotech giant has raised the domestic prices of several of its products by 4% to 7%. This includes quite a few TAF-based HIV drugs, which the analyst believes will lead GILD to meet his expectations calling for an 8% year-over-year rise in its U.S. HIV franchise for 2017.

In reaction, the analyst reiterates an Outperform rating on GILD with a price target of $100, which represents a just under 38% increase from where the shares last closed.

Nadeau notes, “These increases are consistent with Gilead’s historical practice as it has typically raised the prices of its HIV medicines during the first quarter of the year,” continuing, “Gilead will not recognize the full magnitude of the price increases because of discounts, rebates, and regulations. The price to Medicaid, for example, can only increase by an amount related to inflation. Nonetheless, these price increases give us additional confidence in our 2017 HIV franchise estimates which projects 7.6%Y/Y growth in revenue.”

Ultimately, “Through the launch of its new TAF-based combination pills Gilead is successfully shifting its franchise away from TDF-based regimens before the availability of the first TDF generics late this year. […] While GILD’s HCV franchise is struggling, its HIV franchise continues to deliver solid and consistent performance,” Nadeau contends, seeing these price increases as a positive in GILD’s corner.

According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, three-star analyst Phil Nadeau is ranked #1,659 out of 4,373 analysts. Nadeau has a 47% success rate and earns 1.8% in his yearly returns. However, when recommending GILD, Nadeau loses 7.1% in average profits on the stock.

TipRanks analytics indicate GILD as a Strong Buy. Based on 13 analysts polled by TipRanks in the last 3 months, 10 rate a Buy on GILD stock while 3 maintain a Hold. The 12-month average price target stands at $91.73, marking a 26% upside from where the stock is currently trading.

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