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Gilead stock price target cut to $75 by RBC on commercial outlook

EditorIsmeta Mujdragic
Published 02/14/2024, 10:24 AM
Updated 02/14/2024, 10:24 AM
©  Reuters

On Wednesday, RBC Capital adjusted its price target on shares of Gilead Sciences (NASDAQ:GILD), reducing it to $75 from the previous $76, while sustaining a Sector Perform rating. The adjustment follows a meeting with Gilead's management, which provided insights into the company's recent performance and strategic acquisitions.

The dialogue with Gilead's management left analysts feeling more assured about the near-term prospects of the company's core commercial operations, especially in the HIV sector. The acquisition of a biopharmaceutical company, referred to as the CBAY deal, is expected to add a low-risk asset that may contribute to the company's performance in the medium term, potentially mitigating fundamental downside risks.

Despite the optimism for the company's mainstay HIV treatments, RBC Capital noted that Gilead has encountered some challenges in its efforts to diversify into the oncology market. These difficulties have required the company to adjust and recalibrate its expectations, which has had the effect of limiting the near-term catalysts that could otherwise lead to a significant increase in the stock's value.

The firm's decision to adjust the price target is based on model updates and reflects a view that Gilead's stock is likely to trade in line with market expectations. The management's strategies and the recent acquisition are seen as stabilizing factors, yet the oncology segment's slower progress curbs the potential for near-term stock appreciation.

In summary, while RBC Capital acknowledges the potential of Gilead's recent business moves to support its commercial activities, particularly in the HIV domain, the firm also recognizes the need for the company to navigate through the complexities of expanding into new therapeutic areas like oncology.

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