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Sing Hallelujah! Gilead Sciences, Inc. Shares Are on the Move; Oppenheimer Weighs In

Oppenheimer's Hartaj Singh notes that Gilead outperformed his 4Q expectations, but continues to play it safe on the giant.


Gilead Sciences, Inc. (NASDAQ:GILD) delivered fourth quarter earnings along with a business update after the bell last night, sending shares on a nice 4.5% upturn today.

The encouraging performance leaves one sidelined analyst wondering what the monster variable mover could be this year, with odds on standout combination data due the first half of this year in non-alcoholic steatohepatitis (NASH), the most extreme form of non-alcoholic fatty liver disease. The second driver: robust FINCH 2 filgotinib data in active rheumatoid arthritis, due in the back half of the year.

Oppenheimer analyst Hartaj Singh sees a “stabilizing” business and muses, is “pipeline and growth over the horizon” for Gilead?

Regarding NASH combination data and FINCH 2 filgotinib data, the analyst notes: “Both of these events could lead to these franchises being given credit in GILD’s valuation (for, e.g., NASH is ~2% to 3% and filgotinib <1% of our current valuation). We await visibility.”

Until Singh sees further visibility, he is hedging his bets, reiterating a Perform rating on GILD stock without listing a price target. (To watch Singh’s track record, click here)

Notably, the giant last night surpassed the analyst’s scaled back sales expectations by 5% and beat out on non-GAAP EPS by roughly 38% thanks to a tax benefit advantage in the fourth quarter. The 2018 guide essentially aligned with Sing’s forecasts.

Singh writes, “We expect the HIV business to power 2018E/19E, making up for a still slowly compressing HCV business and some HIV/ Other Products patent losses. We also expect 2018E/19E to become clinical catalyst years with important NASH and inflammation readouts and finally we expect GILD to return to strong sales/earnings growth in 2020E, as all the businesses are stable and/ or growing.”

On a positive note, “As we had noted recently, there are ways that GILD can work in 2018E. A strong BIC/F/TAF launch with positive early stage combination data for the NASH franchise in 1H18 and positive inflammation data […] in 2H18 could increase commercial and pipeline visibility in 2019E and beyond. The HCV business, once stable, could actually turn into a margin-fattening cash cow,” the analyst concludes, cautious, but “intrigued” by Gilead’s potential.

TipRanks underscores a cautiously optimistic Wall Street assessing the biotech giant’s prospects in the market. Out of 10 analysts polled in the last 3 months, 6 are bullish on the stock with 4 playing it safe on the sidelines. With a return potential of nearly 10%, the stock’s consensus target price stands at $90.50.