Maxim analyst Jason McCarthy is taking an enthusiastic step away from the sidelines on Gilead Sciences, Inc. (NASDAQ:GILD) after learning from both the company’s management as well as the CEO of new acquisition Kite of manufacturing plans for the launch of lymphoma drug Yescarta.
The verdict? McCarthy is enticed by the biotech giant’s opportunity in China, coming away a new member of the bullish camp, believing that recently-acquired “KITE could be the gift that keeps on giving.” For Gilead, the perfect “gift” for the holiday season will be a shift that kickstarts “a new oncology paradigm,” setting the company up as “an industry leader in cell therapy.”
In reaction, the analyst upgrades from a Hold to a Buy rating on GILD stock while assigning a $94 price target, which implies a 27% upside from current levels. (To watch McCarthy’s track record, click here)
“Suffice to say, we were impressed and left clear with the notion that Gilead (and Kite) can overcome manufacturing challenges to commercialize in the U.S. and globally, especially China, this new innovative therapy,” writes McCarthy.
“Why buy Gilead now?” the analyst continues, answering with a clear vote of confidence weighing in the giant’s favor: “Because in our view, you get recently-acquired KITE for free, and Gilead’s HCV franchise, which in its first year of launch in 2015, set new records as the best-selling drug in the world in its first year on the market, but then faced tough comparisons in its second year. As the HCV franchise now matures into its fourth year, comparisons get easier, balanced by competitive market dynamics. What’s important is to not lose sight of the fact that Gilead had ~$2.7B in free cash flow last quarter.”
Ultimately, “We are now seeing a paradigm shift in oncology with T cell therapies integrating into treatment regimens for years to come,” McCarthy concludes, wagering, “CD19 is just the beginning.”
TipRanks shows the biotech giant has scored a largely positive analyst consensus based on analytics compiling analyst ratings polled over the last 3 months. With 11 analysts bullish on Gilead stock and 5 sidelined, McCarthy is joining a bullish majority on the Street. The 12-month average price target stands at $88.67, marking a nearly 20% upside from where the stock is currently trading.