Gilead Earnings: Maintaining Our $97 Fair Value Estimate, Expecting HIV and Liver Disease Catalysts

We’re maintaining our $97 fair value estimate for Gilead Sciences following first-quarter product sales growth of 5%, in line with our expectations. We think the progress of new long-acting HIV treatments to phase 3 trials is encouraging, and we expect lenacapavir’s data coming later this year in HIV prevention could help expand the eligible US market and secure access for patients outside the US. We think Gilead’s liver disease portfolio is well positioned to generate growth going forward, as it saw 9% growth in the quarter thanks to stabilizing hepatitis C treatment demand, and Gilead’s recent CymaBay acquisition appears to be a perfect fit. However, competition is weighing on the firm’s more rapidly growing oncology products like Trodelvy (breast and bladder cancers) and lymphoma cell therapy Yescarta. We think Gilead needs positive data from upcoming multiple myeloma and lung cancer studies to retain strong oncology growth and push overall sales growth into durable mid-single-digit territory. Overall, the stability of the HIV and liver disease businesses and the growth potential in oncology support the firm’s wide moat.