Analyst Matthew Harrison raised his rating on the stock from a Hold to a Buy, setting a price target of $83.
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Two things will happen this year that will lift investors’ esteem of Gilead Sciences, says Morgan Stanley in an upgrade note Tuesday. A successful breast-cancer study could open a multibillion-dollar market for Gilead’s Trodelvy antibody. And a long-acting drug could restore growth to the company’s HIV treatment franchise.
Analyst Matthew Harrison raised his rating on the stock from a Hold to a Buy, setting a price target of $83. The upgrade helped lift Gilead (ticker: GILD) 5.9% in recent trading, to $67.05. If Harrison proves right, there’s still more than 20% upside to the stock.
Gilead received Trodelvy with its 2020 acquisition of Immunomedics. The product links a tumor-targeting antibody with an anticancer drug payload. Before the end of the year, the company expects to report how long the treatment stopped cancer progression in a Phase 3 trial against the metastatic breast cancers of the HR-positive/HER2-negative category, which afflicts about 120,000 U.S. women.
Early studies were encouraging, and Harrison gives the Phase 3 study a 75% likelihood of success. The resulting sales could add $1.8 billion to Gilead’s annual revenue.
The second big catalyst he expects this year will be for the drug lenacapavir, which targets the capsid protein in HIV. The long-acting drug can be given as an injection just twice a year, or as a pill once a week. Gilead plans trials that test ienacapavir in combination with long-acting antiviral drugs of its own, or from another drugmaker. The novel drug islatravir from Merck (MRK) would be a good choice, says Harrison.
The resulting HIV combination treatment could prove highly effective and worth $9 billion in annual revenue, Harrison estimates. Even if Gilead shares profits with a partner, the earnings could add more than $15 to Gilead’s stock price, he says.
Write to Bill Alpert at [email protected]
