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Gilead Sciences Inc GILD

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Economic Moat




Maintaining our $85 FVE for Gilead Following Steady Q2; Guidance Fits our Remdesivir Assumptions

Karen Andersen, CFA Sector Strategist

Analyst Note

| Karen Andersen, CFA |

Gilead's product sales fell 10% year over year in the second quarter due to generic pressure on Letairis and Ranexa, a pandemic-related decline in patients seeking hepatitis C treatment and HIV pre-exposure prophylaxis, and the reversal of patient stockpiling that benefited first-quarter results. Management raised its product sales guidance for 2020 by a range of $1.2-$2.8 billion after incorporating coronavirus headwinds (less than $500 million impact in the first half) and highly uncertain sales assumptions for remdesivir. This guidance fits with our assumption of $2 billion in remdesivir sales in 2020, and we're maintaining our $85 per share fair value estimate for the firm. Gilead continues to build its oncology pipeline with small deals to supplement the larger Forty-Seven acquisition (which closed in the second quarter), and we think this investment will eventually offer support to the firm's wide moat, which currently rests on its dominant position in infectious diseases including HIV, hepatitis C, and now COVID-19.

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Company Profile

Business Description

Gilead Sciences develops and markets therapies to treat life-threatening infectious diseases, with the core of its portfolio focused on HIV and hepatitis B and C. The acquisitions of Corus Pharma, Myogen, CV Therapeutics, Arresto Biosciences, and Calistoga have broadened this focus to include pulmonary and cardiovascular diseases and cancer. Gilead's acquisition of Pharmasset brought rights to hepatitis C drug Sovaldi, which is also part of combination drug Harvoni, and the Kite acquisition and pending Forty-Seven acquisition boost Gilead's exposure to cell therapy and noncell therapy in oncology.

333 Lakeside Drive
Foster City, CA, 94404
T +1 650 574-3000
Sector Healthcare
Industry Drug Manufacturers - General
Most Recent Earnings Jun 30, 2020
Fiscal Year End Dec 31, 2020
Stock Type High Yield
Employees 11,800