Gilead Sciences has lost more than 22% year to date
Gilead Sciences, Inc. (NASDAQ:GILD) coverage has been initiated at Berenberg, a financial services and research firm. The analyst has placed an initial rating of Buy on the stock, despite the fact that it has lost about 22% of its value year to date. According to Ms. Laura Sutcliffe, the HCV franchise has peaked faster than expected and is set to lose a part of its value in the coming days.
Gilead Sciences has played a very critical role in the development of treatments for Hepatitis C and has essentially revolutionized the process the way patients are dealt with. During the three year period, the company’s Hepatitis C franchise revenues have tripled; according to the analyst’s projection, however, they are expected to remain flat from here onwards.
Berenberg analyst Ms. Sutcliffe defended her initial buy rating by describing the investor reaction to flattening Hepatitis C growth as overdone. She believes that the company’s HCV franchise is likely to maintain its current volumes and there is little to no downside risk. The cash generation capabilities of Gilead’s HCV franchise is among the best in the industry and is likely to continue to perform satisfactorily in that regard.
Gilead first launched its HCV business back in 2012, which reported a revenue of more than $19 billion last year. Since the launch, a large number of patients have been treated and the analyst expects the number of patients to drop following successful treatments. However, it does not in any way spell doom for Gilead’s HCV Franchise as a large number of people still suffer from Hepatitis C and some new cases are reported every year. The analyst believes that despite the decline, HCV will still net $10 billion plus in terms of revenue in the year 2019.
The analyst has given the stock buy rating with a price target of $112. The analyst opinion for the stock has seven buy, eight outperform and 10 hold. Presently, the stock trades at $78.05 after having declined 0.83%.