How High Will Gilead Sciences Stock Go?

Biopharmaceutical leader, Gilead Sciences (NASDAQ:GILD) primarily focuses on creating niche antiviral therapies. It has treatments for several critical illnesses, such as HIV/AIDS, hepatitis B and C, and COVID-19 and has successfully commercialized more than 29 life-changing therapies so far.

In 2019, the company had planned to deliver ten-plus transformative therapies over the next ten years and, to hit that goal, it has 54 ongoing clinical trials across virology, oncology, and inflammation segments.

So far, that has all translated to positive market momentum but what does the future hold now and what heights can Gilead scale to before reaching a ceiling?

Snapshot of What Makes Gilead Special

What makes a great pharma company is its suite of products. And when it comes to Gilead, it stands out for its range of treatments. For example, Gilead has played an important part in developing new treatments for HIV that not only increase the lifespan of those affected by this virus but also minimize the spread of the disease.

The company has a good track record of producing new and improved forms of therapeutic as well as refining treatments to improve outcomes. For instance, Biktarvy, a once-daily single-tablet regimen for HIV, has received plaudits for its effectiveness and tolerability.

Gilead Sciences has a broad pipeline but hasn’t deviated from its core HIV business, advancing next-generation treatments with long-acting therapies for high adherence and better patient outcomes.

When it comes to treating hepatitis, both Harvoni and Epclusa have become benchmarks with high cure rates. Gilead has made the bold claim that it plans to make hepatitis C a thing of the past by 2030.

Beyond its flagship HIV treatment, Gilead is known for Veklury or remdesivir, which became central to combatting COVID-19. Indeed, Gilead was the first to gain FDA approval for the treatment.

Gilead also offers drugs for treatments ranging from cancer to liver disorders, going so far as to acquire Kite Pharma so that it can capitalize on other therapeutic modalities like cell therapy. As a result of these purchases and development in-house, Gilead’s cancer-treatment portfolio extends to lymphomas and multiple myeloma.

In the early part of this year, Gilead also bought CymaBay Therapeutics, which is anticipated to add to Gilead’s strengths in developing therapies for hard-to-treat liver diseases. 

Another ongoing focus area of the company in therapeutic development is oncology. Management has plans to focus on over 20 indications and be on the list of top 10 oncology companies by 2030.

The Good, Bad & Ugly of Gilead’s P&L

It’s no secret that sales of COVID-19 drugs have been waning and that’s taken a toll on Gilead too. This decline has weighed heavily on the company, especially because Veklury was its leading product for a large part of the pandemic.

Although reduced COVID-19 drug sales are a drag, future growth may originate from the oncology and inflammatory disease segments.

In Q4 2023, revenues fell by 4% year over year to $7.1 billion compared to the same period in 2022, primarily due to lower Veklury (remdesivir) and HIV sales, which was partially offset by higher Oncology sales.

EPS slid to $1.14 in the fourth quarter of 2023 compared to $1.30 in the same period in 2022, primarily due to higher total costs and expenses as well as lower Veklury revenues.

FY 2023 revenue decreased 1% year over year to $27.1 billion compared to 2022, driven by a reduction of $1.7 billion in Veklury sales, largely offset by higher HIV and Oncology sales.

In its most recent quarter ending March 2024, revenue increased 5% year over year to $6.7 billion, compared to the same period in 2023, primarily due to higher HIV, Oncology, and Liver Disease sales.

On a less positive note, non-GAAP EPS fell substantially to negative $1.32 in the first quarter of 2024, compared to $1.37 in the same period in 2023, driven by the charges related to its recent acquisition of liver drug developer CymaBay Therapeutics.

It has also lowered its full-year non-GAAP EPS guidance to $3.45 to $3.85 from a previous range of $6.85 to $7.25.

How High Will Gilead Sciences Stock Go?

Gilead Sciences stock has the potential to rise to as high as $83.50 per share according to the consensus of 27 analysts with the most optimistic price target being $119 per share.

The company has no doubt suffered from the declining sales of its COVID-19 treatment but impressively overall sales were up last quarter by 5.4% to $6.9 billion and 5.3% to $6.6 billion. Those two sequential up quarters broke a string of largely flat to negative quarters stretching back all the way to the end of 2021.

Still, it hasn’t been enough to persuade analysts that everything is hunky dory given that 17 of them revised their earnings estimates lower for the upcoming quarter.

Nonetheless, Gilead trades with a relative high shareholder yield of 6.6% and is a relatively low volatility stock that appeals to conservative investors, which is not a surprise given its near 3.91% yield.

With a relatively high price-to-earnings ratio, though, and slim profitability of just $1 billion on $27 billion in revenues it’s easy to see why some investors may be anxious about future prospects. The pharma space is notoriously subject to FDA approvals and clinical trial data so, while the broad pipeline should smooth out the journey, it would be unwise to expect plain sailing.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.