Gilead Sciences stock soared by more than 8 percent on Friday as Wall Street’s latest results showed that its HIV franchise was not only expanding but also holding steady. Its new HIV prevention drug Yeztugo is expected to become a major catalyst for growth in the future.
After the company reported steady results for its second quarter and increased guidance to 2025, analysts from major firms raised their price targets.
The stock rose more than 8% Friday after Gilead announced adjusted earnings per share ($2.01), which was slightly higher than the $1.97 analysts expected, according to LSEG.
The revenue rose by 2% over the past year to $7.9 billion. This was in line with market expectations.
Clean beats and street applause
BMO Capital Markets characterized the third quarter as “a fresh breath with clean beats and increases,” noting that the HIV business “fired on all cylinders.”
The company maintained its “Outperform” rating with a $130 target price.
Morgan Stanley raised its target from $135 to $143, while maintaining an Overweight, due to “strong performances in the HIV segment”, and Yeztugo’s promising trajectory.
J.P. Morgan’s (‘Overweight,’ PT $135) “confident” comment on the launch suggests encouraging trends for early adoption.
Bernstein (“Outperform”, PT $120) described the US PrEP as “ripe” to Yeztugo’s success. Oppenheimer (“Outperform”, PT $128) cited the coincidence of the launch with the US Supreme Court’s ruling that mandates health insurance companies to pay for certain preventive services recommended by the court at no charge.
Two-year PrEP seen as competitive advantage
Yeztugo is the only long-acting HIV prevention injectable approved by US regulators and administered twice per year.
Analysts claim that it is a solution to long-standing obstacles for daily oral PrEP such as stigma and lack of healthcare accessibility.
Daniel O’Day, CEO of Reuters, said that almost as soon as the drug was approved it began to be rolled out.
The first script was written in hours, and the first injection was given within days. Gilead will achieve its goal to cover 75% of US insurance companies for the twice-yearly injectable within 6 months. And 90% within one year.
Analysts believe that the total HIV product sales increased 7% over the previous year to $5 billion during the third quarter. This figure highlights the segment’s resilience, even in spite of generic competition from older products such as Truvada.
Optimism fuelled by new guidance
Gilead expects to earn $7.95 – $8.25 per shared, compared to $7.70 – $8.10. It has also raised its product sales forecast for 2025 to $28.3 bn – $28.7 bn.
Andrew Dickinson, Chief Financial Officer at the company, credited this upgrade to “strong HIV sales” and “continued expense discipline”.
Zacks analysts said that “it has been a very eventful year so far for GILD.” Yeztugo, GILD’s HIV prevention drug under Truvada’s generic name, has been approved by the FDA.
Although Gilead’s cell therapy division continues to be challenged by headwinds, the general consensus is that Gilead’s HIV franchise has been strengthened and its execution disciplined to help it navigate the industry’s challenges.
The post Gilead Sciences share price soars; Analysts lift target on HIV strength and Yeztugo Outlook may be updated as new information unfolds
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