Biotechnology firm Gilead Sciences Inc. (GILD) is so far enjoying a more than 10% rise in its shares this year amid volatile markets, and that success looks set to continue. Citing the strong fundamentals of the business as a whole, as well as the company’s new HIV treatment, Barclays analyst Geoff Meacham maintained his “buy” rating and raised his price target for Gilead to $95 last Tuesday, according to Barron’s.
At a total year-to-date rise of 12.7% as of the close of trading on Friday, Gilead is beating both the Nasdaq Biotech Index’s (NBI) 7.2% rise and the S&P 500’s rise of 4.2%. Gilead is also still trading at a relatively attractive forward price-to-earnings ratio (P/E ratio) of 12.14 compared to the S&P’s forward multiple of 17.75.
With forecasts of 10% or less gains for the overall market, Gilead will outperform the market as the new $95 price target would mean a further 18% rise from Friday’s closing price of $80.72 (20% from the $79.32 closing price last Tuesday, when Barron’s published their article). (To read more, see: Biotech Stocks Near Massive Breakout.)
Much of the stock’s recent performance has been helped along by its recent acquisitions and optimistic forecasts by analysts. In late January, Jeffries analyst Michael Yee raised his rating for Gilead from “hold” to “buy” and raised his price target from $87 to $95. He noted that earnings estimates in the coming years are “finally on the upswing,” as reported by Barron’s in a separate article.
While increased competition in the market for hepatitis C drugs has caused that part of Gilead’s business to decline, and its Kite Pharma acquisition in the CAR-T cancer therapies market are not yet ready for greater scale, the company’s new HIV treatment, Biktarvy, is likely going to be one of the most immediately profitable areas of the business. (To read more, see: Gilead’s Breakout May Spark 18% Gain.)
Meacham’s confidence in Gilead’s HIV products rose after conducting a survey on how those products were performing. He raised his estimates for the company’s HIV product sales to somewhere between $100 million and $400 million. The increased sales will help boost Gilead to new highs.