Gilead Earnings: Maintaining Our $97 FVE Following In-Line HIV and Oncology Performance

Gilead’s third-quarter results were stronger than we had anticipated, almost entirely due to higher than expected COVID-19 hospitalizations and resulting sales of COVID-19 treatment Veklury ($636 million). Veklury helped Gilead maintain flat total product sales at $7 billion in the quarter relative to the third quarter of 2022. We’re not making any changes to our $97 fair value estimate, as we’re maintaining our projections for Gilead’s core businesses in HIV and oncology. We continue to see Gilead’s long-term strategy for HIV growth (centered around new injectable products for treatment and prevention) as well as strong prospects for oncology growth supporting a wide moat. We think investors underappreciate the stability of the firm’s HIV foundation and the growth potential of the firm’s oncology portfolio and pipeline.