Piper Jaffray’s Take on Gilead Sciences, Inc. (GILD) Amid HIV/HCV Franchise Debate

Company positioned for better long-term growth by keeping HIV and HCV franchises together, says Piper Jaffray

Gilead Sciences, Inc. (NASDAQ:GILD) divides the analyst world with questions in regards to keeping its dual franchises a one-two punch or separating its HIV and HCV franchises. For Piper Jaffray analyst Joshua Schimmer, the answer is an easy one, and he is strongly on board for keeping the company’s best assets a united front.

Schimmer reiterates an Overweight rating on GILD with a price target of $108, which represents a 33% increase from where the shares last closed. From the analyst’s perspective, if share repurchase remains steady, GILD could very well offset in its third-quarter an over $300 million shortfall in the HCV business beyond the $230 million quarter-over-quarter forecast by the Street, while still meeting the Street’s projected EPS.

Schimmer notes, “We are frequently being asked if we think splitting GILD into two pieces is a good idea (HIV vs HCV franchises). While we applaud the realization that the hyper-focus on HCV is distracting from a materially undervalued and robust HIV business (that includes bictegravir/Descovy), we think splitting the company is a poor idea and the probability of this occurring is negligible. We welcome presentations that highlight the sum of the parts (HIV + HCV) and welcome efforts to improve the pipeline. GILD remains our top large cap pick.”

Recommended Article: Credit Suisse Dives In on Gilead as Relationship with Express Scripts in HCV Is Potentially Improving

As far as the analyst is concerned regarding the biotech firm’s position for long-term growth from new product acquisitions and multiple expansion, to put it simply, “We like it.”

As usual, we recommend taking analyst notes with a grain of salt. According to TipRanks, analyst Joshua Schimmer is ranked #3,972 out of 4,122 analysts. Schimmer has a 39% success rate and faces a loss of 6.2% in his annual returns. When recommending GILD, Schimmer loses 1.5% in average profits on the stock.

TipRanks analytics exhibit GILD as a Buy. Based on 17 analysts polled in the last 3 months, 8 rate a Buy on GILD, while 9 maintain a Hold. The 12-month average price target stands at $108.23, marking a 33% upside from where the stock is currently trading.Screen Shot 08-22-16 at 02.06 PM

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