Gilead's Strong Q3 Bodes Well for Oncology and HIV Growth; Maintaining Our $77 Fair Value Estimate

We’re maintaining our $77 fair value estimate for Gilead Sciences following strong third-quarter results that displayed the strength of the company's dominant HIV regimen Biktarvy as well as oncology therapies Yescarta and Trodelvy. Sales in the quarter were well ahead of our expectations, mostly due to continuing strong sales of COVID-19 drug Veklury (well below peak sales but still $925 million), but also due to Biktarvy’s solid U.S. sales (nearly $2.3 billion in the quarter). While we’ve slightly raised our near-term Veklury outlook and long-term Biktarvy sales forecast, this wasn’t significant enough to alter our valuation. That said, we think the quarter's strong performance shows the potential for Gilead’s oncology franchise to grow and diversify, supporting the firm’s already established wide moat in infectious diseases.