Analysts On Gilead: We Think They're Mobilizing For A Deal

Investors Focus On Potential Deal

Credit Suisse said investor focus remains on whether the company will complete a deal. The firm is of the view that the company is getting mobilized and putting the pieces in place to execute such an activity. If a potential $3 billion revenue stream is added to the firm's top of its base case, it expects a possible valuation of $85 per share.

Clarifying further, the firm said it thinks the company remains interested in oncology, NASH and inflammation. The firm noted the company expressed interest in not just small molecules but biologics as well.

The company also said they do not have any specific debt/EBITDA targets, but have a lot of flexibility, the firm added.

If the company is interested in oncology, Credit Suisse opined it is better off acquiring many assets or a platform. However, in other diseases like inflammation and NASH, the firm thinks adding assets is likely the most reasonable strategic path through smaller bolt on acquisitions or partnerships.

Q1 Print

Credit Suisse noted that the company reported first-quarter revenues of $6.37 billion compared to the $6.49 billion consensus estimate. The firm said the $150 million beat by Harvoni U.S. HCV sales is an encouraging trend, suggestive of stable trends heading into the second quarter as well.

In terms of HIV business, the firm noted that TAF franchise products beat consensus across the line, highlighting strong uptake trends of these new products.

Raising Estimates

Credit Suisse raised its 2017 earnings per share estimate to $8.32 from $8.13, due to higher HIV TAD sales and higher HCV sales in the United States.

Credit Suisse has an Outperform rating and a $79 price target on the shares of Gilead Sciences.