On Mar 26, 2013, we reiterated our Neutral recommendation on
Gilead Sciences, Inc.
) as we believe that the stock is fairly priced at current levels
with limited scope for upside. The stock carries a Zacks Rank #3
(Hold) in the short run.
Why the reiteration?
In Feb 2013, Gilead delivered better-than-expected revenues and
earnings in the final quarter of 2012. Product sales climbed 18%
to $2.51 billion, driven by anti-viral products, such as Atripla,
Truvada and Viread (up 19% to $226.7 million). Products sales
were also aided by the launch of Complera/Eviplera in 2011.
Stribild - an HIV combination pill launched in the US in Aug 2012
- contributed $40 million to total revenue in the final quarter
of 2012, up 128.6% sequentially.
On the fourth quarter 2012 conference call, Gilead provided
guidance for product revenue in the range of $10-$10.2 billion
for 2013, reflecting an increase of 6%-9% over 2012 levels. We
expect Gilead to easily achieve the increased guidance driven by
its strong product portfolio.
We are also impressed by Gilead's efforts to develop its
pipeline. Gilead has multiple late-stage candidates in its
pipeline. The company is highly optimistic about the potential of
sofosbuvir, being developed to treat patients suffering from
hepatitis C virus (HCV). The company expects to seek approval for
the candidate in the second quarter of 2013. Successful
development of sofosbuvir would not only boost Gilead's top line,
but also strengthen its position in the lucrative HCV market. A
sizeable population suffers from HCV the world over.
Apart from the late-stage pipeline, Gilead has multiple
candidates in mid/early stages of development. The successful
development of the pipeline candidates will help drive growth.
We remain concerned about the generic threat looming over key
drugs at Gilead. With generic competition looming large over the
company, Gilead's pipeline needs to deliver. We see limited scope
for upside until more visibility is obtained on the pipeline
development at Gilead. Consequently, we retain our Neutral stance
on the stock.
Other Stocks to Consider
Favorably placed stocks in the pharma sector include
). All three stocks carry a Zacks Rank #1 (Strong Buy) and are
ATHERSYS INC (ATHX): Free Stock Analysis
CYTOKINETCS INC (CYTK): Free Stock Analysis
GILEAD SCIENCES (GILD): Free Stock Analysis
XOMA CORP (XOMA): Free Stock Analysis Report
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