Is It Premature to Celebrate Gilead Sciences, Inc.’s (GILD) Kite Pharma Momentum? Jefferies Looks Beyond the Recent Bull Rally

Analyst questions the bigger picture for GILD, including risks and visibility challenges wavering in 2018.

Gilead Sciences, Inc. (NASDAQ:GILD) investors have been throwing a party lately ever since the biotech giant brought Kite Pharma as the best party favor of all- an acquisition that yielded a 16% stock upturn during the last month alone. For perspective, the iShares Nasdaq Biotechnology ETF saw a little over half the same growth in this interval.

One voice of reason on Wall Street finds it a bit premature to keep the celebration going. Sure, the biotech giant has temporarily made investors happy by revealing its takeover of smaller biotech fish Kite Pharma to the tune of $11.9 billion. Specifically, the giant cares about Kite’s CAR-T cancer therapy Axi-Cel in non-Hodgkin’s lymphoma- an asset with a PDUFA date with destiny by November’s close. However, what happens with the rest of Gilead’s challenges, including a rapidly eroding Hepatitis C franchise?

Jefferies analyst Michael Yee cannot help thinking realistically here, and wonders about the what-next rather than just the ‘now’ when it comes to the stock’s prospects following its Kite acquisition.

As such, the analyst reiterates a Hold rating on GILD with a price target of $83. (To watch Yee’s track record, click here)

Yee surveys Gilead moving forward from the sidelines, laying out his “bottom line:”  “The big picture is based on our investor discussions and conversations and based on the known math…GILD P&L is seen as turning around over a few years and market is assigning a higher multiple now (stock is +13% since announcement, vs S&P500 +2%) due to new ‘incremental’ revenue streams….at this point the investor debate is mostly around 1) is it too far away to give full credit yet, 2) are there still some risks/visibility issues in 2018 w/ core biz HCV/HIV, and 3) how much will GILD stock trade on KITE sales in 2018 if HCV can stabilize next year…ie does GILD stock move mostly on and become much about the launch of Axi-Cel in 2018…?”

TipRanks analytics exhibit GILD as a Buy. Based on 15 analysts polled by TipRanks in the last 3 months, 10 are bullish on Gilead stock while 5 remain sidelined. With a return potential of nearly 4%, the stock’s consensus target price stands at $86.69.

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