By Mackenzie Tatananni
Gilead Sciences stock has room to climb, and investors shouldn't overlook the company's impressive record in navigating HIV policy, Citi Research says.
Analysts led by Geoff Meacham reiterated a Buy rating on the shares with a $125 price target in a note Wednesday. With Gilead up 1.2% to $109.23 on Wednesday, the price target suggests potential upside of 14%.
Gilead's HIV franchise remains the company's biggest value driver, the Citi team said, adding that the product portfolio is coming into focus amid the Trump administration's efforts to slash federal spending.
The analysts "wouldn't be surprised" if Biktarvy, Gilead's blockbuster HIV treatment, was included among the drugs selected for price negotiations in 2028 as part of the Inflation Reduction Act.
Recent rumors of plans to cut funding for HIV prevention programs, as well as proposed Medicaid cuts, add incremental risk, the analysts wrote. They noted that CDC cuts to pre-exposure prophylaxis, or PrEP -- a medication regimen that helps prevent HIV infection in people who are at risk -- "may be lower impact given its commercial tilt and minimal reimbursement."
In the analysts' view, Gilead has even more to offer, including long-acting oral treatments that present a "significant new product cycle" -- and one they believe investors have overlooked.
A strong launch of lenacapavir for PrEP, tentatively slated for summer 2025, in addition to the expansion of several lenacapavir combos in HIV treatment, should "more than offset" any policy-related headwinds, the analysts said.
That's not to mention future growth catalysts, including the launch of oral treatment regimens in 2027 and 2029. Those should not only soften the impact of Biktarvy's loss of exclusivity in 2033, but potentially surpass it.
The pharma company's HIV portfolio is its crown jewel, helping Gilead remain a leader in HIV prevention and treatment in the U.S. In the fourth quarter, HIV product sales rose 16% to $5.5 billion from the previous year, with Biktarvy sales also growing 21%.
"Gilead has demonstrated a remarkable ability to navigate patent expirations and HIV lifecycle management, maintaining its market leadership through successive generations of drugs in HIV treatment," the Citi analysts noted.
Biktarvy quickly snapped up market share after it was approved in 2018, with a significant portion of its growth attributed to patients switching from other regimens, including Gilead's own Genvoya, an earlier-generation treatment.
The company's transition from Truvada to Descovy, two medications used to prevent HIV infection, has also been a success in their eyes. The analysts noted how Gilead used a "multifaceted strategy" to shift patients from Truvada to Descovy in anticipation of Truvada's patent expiration in 2020.
They aren't the only optimists on Wall Street. Of 31 analysts polled by FactSet, 19 rate Gilead at Buy or equivalent, while 11 rate it at Hold. Only one analyst rates the stock at Underweight.
Gilead's history of switching from older to newer regimens "highlights the company's ability to anticipate market needs and develop innovative therapies that address those needs," the analysts wrote -- a trend they expect to continue in the years ahead.
Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com
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(END) Dow Jones Newswires
March 26, 2025 12:45 ET (16:45 GMT)
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