Analysts see an interesting path ahead for Gilead Sciences, Inc. (NASDAQ:GILD), between exciting collaborative possibilities and its pipeline catalysts that have brought bullish notes across the board to the surface. However, even with confidence, there is clearly rising pressure for Gilead to join forces with another company, considering challenges with valuation- as long as investors are not scared off by risk for share dilution.
When assessing investor sentiment, Barclays analyst Geoff Meacham believes an M&A agreement could be a game-changer for the biotech giant, from both a clinical as well as commercial standpoint. As such, the analyst reiterates a Buy rating on shares of GILD with a $90 price target, which represents a just under 33% increase from where the stock is currently trading.
As far as Meacham pinpointed shareholder attitude, Most “[…] investors agreed with the need for a larger, more transformational deal, which could be multiple-expanding and pipeline accretive. Importantly, this could provide a real catalyst to put GILD shares back on a growth trajectory that could be more broadly appealing to investors; we suspect this is fully appreciated by the management team and board. A minority of investors were focused on capital deployment through buybacks and dividend growth driven by a healthy underlying HIV franchise.”
However, “While a middle ground could be a material step up in biz dev/licensing activity, this could be a time-consuming process where a critical mass of deals could take 12+ months to be fully executed. Overall, we definitely get the impression that valuation is unsatisfactory to Gilead and that there is more urgency towards a deal than even six months ago. That said, it isn’t clear to us if there is a willingness to deviate from the company’s typical deal parameters or go into new therapeutic categories,” Meacham asserts.
Likewise, Jefferies analyst Brian Abrahams highlights drivers from the giant’s pipeline, positive on share upside waiting in the wings to spring to fruition.
“Based on an EASL title posted in recent weeks but we believe not broadly discussed, ACC inhibitor GS-0976 – one of GILD’s least-talked-about assets in NASH, in our opinion – appears to have demonstrated significant positive effects in the as-yet-unreported ph.II NASH study. The presentation title, ‘Acetyl-CoA carboxylase (ACC) inhibitor GS-0976 leads to suppression of hepatic de novo lipogenesis and significant improvements in MRI-PDFF, MRE, and markers of fibrosis after 12 weeks of therapy in patients with NASH,’ indicates to us that recently-acquired ’0976′s novel mechanism, which has good scientific rationale, may likely be playing out… We believe this meaningfully de-risks a second NASH asset, and given add’l catalysts over the next 12mo could set the stage for increased recognition of potentially meaningful drivers w/in GILD’s internal pipeline. We see upside potential,” Abrahams concludes, reiterating a Buy rating on GILD without listing a price target.
According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, five-star analyst Brian Abrahams is ranked #208 out of 4,564 analysts. Abrahams has a 55% success rate and collects 13.4% in his annual returns. When recommending GILD, Abrahams earns 8.3% in average profits on the stock.
TipRanks analytics indicate GILD as a Buy. Out of 18 analysts polled by TipRanks in the last 3 months, 12 are bullish on Gilead stock and 6 remain sidelined. With a return potential of 20%, the stock’s consensus target price stands at $81.73.