Barclays Shares Its Thoughts On Gilead Sciences Post-Earnings
Barclays remains Overweight on Gilead Sciences, Inc. (NASDAQ: GILD) on valuation and franchise stability, despite reporting disappointing second-quarter results on the heels of hepatitis C drug Harvoni's continued sales declines.
Harvoni, Sovaldi
Sales for Harvoni plunged about 29 percent to $2.56 billion; however, Harvoni's predecessor, Sovaldi, saw a 5 percent rise in sales to $1.36 billion.
"Downward pressure from US payer mix and a slower international ramp resulted in Harvoni missing consensus though US Sovaldi is showing resilience (partly from an uptick in VA patients)," analyst Geoff Meacham wrote in a note.
Guidance
The company cut its 2016 product revenue guidance to $29.5 billion–$30.5 billion from $30.0 billion–$31.0 billion. Barclays also lowered its product revenue forecast by 4 percent to $29.6 billion and EPS by 5 percent to $11.62.
But, Gilead's cash position is strong as it recorded $24.6 billion of cash, cash equivalents and marketable securities as of June 30, up from $21.3 billion at the end of the first quarter.
"The resulting strong cash flow and 2H slowdown in share repo activity suggests to us a build-up of dry powder for M&A / biz dev activity surrounding pipeline de-risking events over the next 6-12 mos," Meacham noted.
Key pipeline data weighted toward year-end 2016 or early 2017, expectations for positive pipeline developments and M&A could become a bigger part of the story in the second half of 2016.
Barclays' Expectations
Meacham has a price target of $115 on the stock, which fell 8.47 percent to close Tuesday's trading at $81.05. Based on Tuesday's close, the analyst's target price represents an upside of 42 percent.
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Latest Ratings for GILD
| Date | Firm | Action | From | To |
|---|---|---|---|---|
| Mar 2022 | Barclays | Maintains | Underweight | |
| Mar 2022 | RBC Capital | Maintains | Outperform | |
| Feb 2022 | BMO Capital | Downgrades | Outperform | Market Perform |
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