Biotech Beat: Analysts Weigh In On Gilead Sciences, Inc. (GILD) And Ilumina, Inc. (ILMN)

Gilead Sciences, Inc.

Yesterday, Gilead Sciences, Inc. (NASDAQ:GILD) posted its third-quarter print in which J.P. Morgan analyst Cory Kasimov detects a mixed bag. On one hand, the analyst sees a clear con exhibited in sustained dipping trends in HCV. Conversely sparring off against the HCV miss is a pro of growth drivers in HIV, thanks to Tenofovir Alafenamide (TAF), designed for patients with chronic Hepatitis B infection, and its recent launches, which are “indeed a bright spot” for the firm.

As such, the analyst reiterates an Overweight rating on GILD while cutting the price target from $115 to $101, which represents a nearly 37% increase from where the shares last closed.

The way Kasimov assesses the biotech giant’s prospects, both negative and positive, he explains, “While we believe investors widely anticipated the HCV miss, it once again underscores that the company’s key franchise is clearly on the decline. Accordingly, we believe the debate as to whether GILD is a value stock or value trap will persist. This is a topic we delved into back in 2Q (thoughts here); today there is simply a larger and louder contingent arguing the trap side.”

“In the end, we still believe the GILD story really boils down to 1) finding a bottom for HCV; 2) what happens on the M&A front; and 3) if there are any pipeline surprises looming. We don’t expect GILD’s industry low multiple (6.3x vs. Biotech at 12.5x, US pharma at 15.8x) to meaningfully change absent new growth drivers. Fortunately, GILD’s balance sheet is exceptionally strong ($32B in cash); hopefully they find something to do with it,” Kasimov concludes.

As usual, we recommend taking analyst notes with a grain of salt. According to TipRanks, analyst Cory Kasimov is ranked #4,026 out of 4,173 analysts. Kasimov has a 24% success rate and faces a loss of 15.3% in his yearly returns. When recommending GILD, Kasimov loses 13.1% in average profits on the stock.

TipRanks analytics demonstrate GILD as a Strong Buy. Based on 12 analysts polled in the last 3 months, 9 rate a Buy on GILD, while 3 maintain a Hold. The consensus price target stands at $101.63, marking a 37% upside from where the stock is currently trading.

Ilumina, Inc. 

Ilumina, Inc. (NASDAQ:ILMN) released third-quarter earnings last night that on the heels of October 10th’s preannouncement of third-quarter revenues and reduced fourth-quarter guidance thereby “limit[ed] any surprises” from Cantor analyst Bryan Brokmeier‘s point of view. In reaction to the print, the analyst advises investors “remain on the sidelines” and reiterates a Hold rating on shares of ILMN with a price target of $155, which represents a 14% increase from current levels.

Brokmeier notes, “As expected, HiSeq placements in the quarter continue to be weak causing a significant decline in instrument revenue (down 23% y/y), which the company largely attributes to customers opting to purchase the less expensive NextSeq.”

“Positively, oncology testing shipments were up 24% y/y and the TruSight Tumor 170 panel remains on track for launch before the end of the year. NIPT remains a headwind as labs shift to in-house testing, but we believe that this will become a tailwind as the in-house testing shift is completed and this large clinical base increasingly tests the average risk population. That said, we still believe a reacceleration of HiSeq placements may be necessary for us to become more positive with our view of shares as the HiSeq instrument is the greatest driver of consumable revenue pull-through,” Brokmeier concludes, ultimately deeming that shares pose an “unattractive risk/reward” given the “company’s growth trajectory.”

According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, one-star analyst Bryan Brokmeier is ranked #3,696 out of 4,173 analysts. Brokmeier has a 38% success rate and faces a loss of 4.3% in his annual returns. When recommending ILMN, Brokmeier forfeits 19.7% in average profits on the stock.

TipRanks analytics exhibit ILMN as a Buy. Based on 12 analysts polled in the last 3 months, 4 rate a Buy on ILMN, 7 maintain a Hold, while 1 issues a Sell. The 12-month price target stands at $150.29, marking a nearly 12% upside from where the shares last closed.

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