Gilead Earnings: Maintaining Fair Value Estimate as HIV and Oncology Growth Continue to Impress

We're maintaining our $97 fair value estimate for Gilead following a strong second quarter that displayed both the firm's continued ability to gain share in the HIV market with Biktarvy as well as potential to grow the relatively new oncology business into a key pillar of its wide moat. Gilead's strength in oncology and HIV drove 5% revenue growth in the second quarter (11% product sales growth excluding COVID-19 drug Veklury). Gilead slightly raised its product sales guidance to $26.3-$26.7 billion, despite lowering Veklury guidance to $1.7 billion, which implies a solid 6.5%-8% growth of the base business. Our own forecast is at the high end of this range, and we continue to see shares as undervalued, as the market fails to give Gilead credit for its long-term potential in HIV (lenacapavir in treatment and prevention) and oncology (further expansion of its portfolio into lung cancer and immuno-oncology).