Argus Sees 'Strong Prospects' For Gilead Sciences

Argus reaffirmed its Buy rating on Gilead Sciences, Inc. GILD Thursday and maintained a $130 price target on "strong prospects for antiviral and oncology drugs."

Analysts David H. Toung and Nicolay Nielsen felt that even with price discounts, hepatitis C drug Harvoni was expected to be a strong contributor to 2015 revenue and EPS growth.

"We view Harvoni as a more effective and convenient treatment for hepatitis C than Sovaldi because Harvoni does not require the addition of interferon. In addition, in some cases, Harvoni may be taken in an eight-week rather than a 12-week treatment course, resulting in considerable cost savings," according to the analysts.

As for another drug in the pipeline, the analysts expected approval of Tenofovir alafenmaide (TAF) for the treatment of HIV in mid-2015.

"In late-stage trials, TAF has been shown to be as effective in viral suppression as Stribild, an existing HIV drug, and with lower rates of decline in bone density and renal function," according to Toung. It was highlighted that the company also generated over $10.3 billion in revenue from HIV drugs in 2014.

The company was scheduled to begin paying a quarterly dividend of $0.43 per share in the second quarter with a yield of approximately 1.7 percent. In addition to the dividend, $15 billion will be added to its buyback program.

The stock traded at 10.2x the firm's 2015 EPS estimate, which the analysts viewed as attractive given "expectations for continued growth from new and established drugs."

Gilead Sciences closed at $101.44 Thursday, up 1.16 percent.