Credit Suisse Downgrades Gilead Sciences, Sees Declining HCV Revenues

Credit Suisse downgraded Gilead Sciences, Inc. GILD Friday from Outperform to Neutral and cut its price target from $130 to $115.

Analysts led by Ravi Mehrotra made the rating change due to “lower medium/long-term HCV franchise revenues, which in turn is principally driven by lower net pricing.”

Mehrotra indicated that the company needs to “refocus on the pipeline” which will most likely happen in mid to late 2015.

The analyst note mentioned that the firm’s Global Biotech and Pharma teams now estimate a flat $16 billion in revenues and 400,000 patients in the total global HCV market for 2016-2018.

Mehrotra estimated that Gilead’s market share of HCV will move from 80 percent in 2015 to 60 percent by 2019. The firm revised HCV franchise revenues downward and by 2018 saw revenues at $10.2 billion, versus the previous estimate of $14.1 billion.

The $115 price target was based on 13.8x the Credit Suisse 2016 EPS estimate of $8.31, which represented an ~10 percent discount to the 2016 S&P 500 PE multiple.

Gilead Sciences traded at $99.15 in Friday’s premarket, down 0.75 percent.