Maintaining Our $81 Gilead FVE Following Solid Q1; Awaiting Arcus Data for Potential Differentiation

We're not making any changes to our $81 fair value estimate for Gilead Sciences following steady results in the first quarter, as we think the firm is still on track to meet management's reaffirmed top- and bottom-line non-GAAP guidance. Gilead's total product sales grew 3% in the first quarter, with 5% growth in sales of COVID-19 antiviral Veklury and 2% growth for the remaining portfolio. Biktarvy's 18% growth led performance in the HIV portfolio, and Gilead is now annualizing pressure from generic Truvada in the United States, which should allow continued single-digit HIV sales growth for 2022. We assume Veklury sales fall substantially for the remainder of the year, however, factoring in lower hospitalizations and more oral and injectable treatment options. Hepatitis C price-related declines continued, but oncology growth is ramping up and beginning to have more of a positive effect on overall sales. Trodelvy ($146 million in sales) and cell therapies Tecartus and Yescarta ($274 million) are growing strongly as they move into earlier lines of treatment. We think Gilead's dominance in virology and growing portfolio in oncology continue to support a wide moat.