Analyst recommendations for Gilead Sciences
Gilead Sciences (GILD) is facing a major challenge in terms of its declining HCV (hepatitis C virus) franchise. However, the recently launched Epclusa seems to be driving Gilead Sciences’s HCV revenues as it is the pan-genotype product that cures HCV regardless of genotype.
To understand Gilead Sciences’s HCV dominance, you can also read How Gilead Dominates the HCV Space.
Additionally, GILD’s HIV (human immunodeficiency virus) franchise is also growing. The strong pipeline and acquisition opportunity rule out the existential threat to the company by the HCV franchise.
According to a Reuters consensus of 26 brokerage firms on November 22, 2016, 88% of the analysts recommended Gilead as a “buy.” Of these analysts, 38% issued a “strong buy,” while 50% issued a “buy” opinion. Around 12% of the analysts issued a “hold” rating on the company.
Mean target price for Gilead Sciences’s stock
The mean target price for Gilead Sciences (GILD) on November 24 was $95.74, presenting a return potential of ~27.1% over its closing price of $75.30 on November 23.
This mean price has been downgraded from the previous estimate of $105.76 on August 22, 2016. As we discussed earlier in this series, the falling HCV franchise is responsible for this downgrade. However, its strong pipeline does support the valuation.
Any positive news on pipeline success, acquisitions, or the strong HIV franchise’s performance could result in a jump in Gilead Sciences’s valuation. The SPDR S&P Biotech ETF (XBI) offers diversified exposure to GILD. XBI has ~2.2% of its total assets in the stock.
Analyst recommendations for GILD’s peers
Following the Reuters survey of 16 analysts on November 24, 2016, 75% of the analysts issued a “buy” rating on AbbVie (ABBV). Of these analysts, 19% issued a “strong buy,” while 56% issued a “buy” recommendation Another 25% of the analysts suggested that the stock should be a “hold. ABBV presents a return potential of 16.3% over the next 12 months, based on its closing price of $60.18 on November 23.
Of the 21 analysts in the Reuters consensus dated November 24, 2016, 38% believed Merck (MRK) should be a “buy,” whereas 62% recommended a “hold.” With 10% “strong buy” recommendations and 28% “buy” recommendations, MRK had a mean target price of $68.00 on November 23, presenting an opportunity to earn 10.3% over its closing price of $61.64.
The Reuters consensus of 22 analysts on November 24, 2016, indicated that 45% analysts issued a “buy” rating for Bristol-Myers Squibb (BMY), whereas 50% recommended the stock should be a “hold.” Around 5% of analysts recommended a “sell” rating on BMY.
With 18% “buy” and 27% “strong buy” ratings, the mean target price for Bristol-Myers Squibb on November 23 stood at $62.74. Bristol-Myers Squibb (BMY) presents an opportunity to earn ~10.6% over the next 12 months.