Gilead Has Solid Q2 and Manageable Exposure to U.S. Pricing Legislation; Maintaining Our $81 FVE

Gilead Sciences produced strong second-quarter results despite lower demand for COVID-19 drug Veklury in the quarter due to lower hospitalization rates. Management increased product sales guidance for 2022 by $700 million to $24.5 billion-$25 billion on strong HIV and oncology sales as well as higher expected demand for Veklury (partly due to depleted U.S. inventories) for the remainder of the year. We're maintaining our $81 fair value estimate and think the market underappreciates Gilead's potential to extend HIV revenue and expand its oncology franchise in the long run. The firm's HIV, hepatitis, and oncology products and pipeline support a wide moat.