Gilead Earnings: Maintaining $97 Fair Value Estimate as HIV and Oncology Catalysts Approach

We’re maintaining our $97 fair value estimate for Gilead following fourth-quarter results and 2024 guidance that was relatively in line with our expectations. Gilead’s operating cost discipline heading into 2024 appears slightly better than our expectations, although we have also removed oral COVID-19 antiviral obeldesivir from our model following failure in a second phase 3 trial, so there was no net impact to our valuation. Gilead’s product sales were flat again in 2023 due to significant declines in demand for COVID-19 antiviral Veklury, similar to 2022 dynamics; excluding Veklury, the firm saw 2023 product sales growth of 7% driven by HIV (6% growth) and oncology (37% growth). Overall, the stability of the HIV business and growth potential in oncology both support the firm’s wide moat.