Why This Gilead Analyst Believes The Stock Is Highly Undervalued

While there is increased visibility for Gilead Sciences, Inc’s (NASDAQ: GILD) HIV franchise, its emerging oncology franchise is not well reflected in its valuation, according to JPMorgan.

The Gilead Sciences Analyst: Chris Schott upgraded the rating for Gilead Sciences from Neutral to Overweight, while raising the price target from $72 to $80.

The Gilead Sciences Thesis: The company’s HIV franchise is likely to grow at a low single-digit CAGR (compounded annual growth rate) through the early 2030s, Schott said in the upgrade note.

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“At current levels, we see GILD’s HIV business alone supporting the stock’s entire market cap,” the analyst wrote. “And with an oncology franchise that we forecast to reach ~$5bn in sales by 2030 as well as potential upside to lenacapravir estimates over time, we see shares as clearly undervalued at current levels,” he added.

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“Finally, while GILD’s acquisition track record represents a point of controversy in the story, we see the company’s capital deployment priorities pivoting to smaller, tuck-in acquisitions going forward,” Schott further mentioned.

GILD Price Action: Shares of Gilead Sciences had risen by 3.35% to $64.40 at the time of publication Tuesday.