Morgan Stanley On What 'Should Be Rewarded' At Gilead

In a report published Friday, Morgan Stanley analysts maintained an Overweight rating on

, with a price target of $109. Gilead Sciences reported better-than-expected 1Q results, largely due to the performance of Harvoni Sovaldi. Revenue across the HIV franchise was, however, negatively impacted by destocking and increased 1Q rebates. The company raised its 2015 sales guidance while keeping its gross margin, R&D, SG&A and tax rate guidance unchanged. The management bought back $3B of stock in 1Q15 and generated $5.7B in FCF. "Mgt is seeing sig. HCV flows of ~30k patients per month moving into treater care suggesting that the backfill rate is similar / slightly higher than the treated rate," the analysts mentioned. Gilead Sciences expects to witness a strong Sovaldi uptake in Spain but more restricted usage in the UK. "Harvoni is available in Germany and France and Mgt. expects reimbursement in Italy and Spain by 2Q15. ~50k HCV pts have started therapy since approval in the EU," the analysts stated. The company provided many pipeline updates while mentioning that it had entered into collaboration with

on its PD-L1 in combination with Zydelig. "HCV leads the way on a strong qtr; we see GILD up 3-5%: While expectations had been rising for Gilead to beat on HCV, the sig. beat was at the very high-end of expectations and should offer relief that mgt. had given away too much HCV economics. Gilead clearly remains the market leader," the report said.