Gilead Sciences (NASDAQ:GILD) has been a favorite among biotech investors due to its successful hepatitis C therapies; Harvoni and Sovaldi. However, the biopharmaceutical company is making headlines again with a new drug for gastric cancer; GS-5745.
GS-5745 is advancing into Phase III testing in the third quarter, prompting RBC Capital analyst Michael Yee to reiterate an Outperform rating on Gilead with a $120 price target. Yee believes this pipeline advancement is beneficial for Gilead investors because of low expectations for the trial. Furthermore, Yee notes that Gilead’s pipeline “is all upside” at this point. He continues, “Management is quietly building a pipeline and we predict they’ll continue to do more cancer and immuno-oncology deals under $5 billion in size and they’re looking in EU perhaps using OUS cash.”
Michael Yee has rated Gilead 20 times since April 2013, earning an 85% success rate and an +18.6% average return per GILD rating. Overall, Yee has a 70% success rate recommending stocks with a +11.4% average return per rating.
The top analyst consensus on Gilead is Strong Buy thanks to all the bullish ratings that followed the company’s first quarter earnings on April 30. Gilead beat expectations for both earnings per share and revenue with more than half of sales coming from Harvoni or Solvadi. Gilead increased their full-year 2015 guidance and declared its first quarterly cash dividend.
Nine analysts weighed in on Gilead following earnings with only one bearish rating. All eight analysts who gave bullish ratings on Gilead have consistently high success rates recommending Gilead including analysts from J.P. Morgan, Barclays, Piper Jaffray, and others. The eight analysts who gave bullish ratings on Gilead directly after earnings have success rates ranging from 78% to 100% and each of the analysts have rated Gilead at least 5 times.
Ying Huang of Merrill Lynch, the one analyst to issue a Sell rating following Gilead’s earnings, has rated Gilead three times with an average loss of 9.3% per GILD rating. Huang is bearish on Gilead due to increasing competition from Merck (NYSE:MRK)’s hepatitis C drug. He warned that although Merck’s pipeline drug may be less effective, “they can gain meaningful market share with an aggressive pricing strategy.” He also cited concerns regarding the “long-term sustainability” of Gilead’s hepatitis C and HIV drug sales.
On average, the top analyst consensus for GILD on TipRanks is Strong Buy.