On Thursday, Wells Fargo (NYSE:WFC) maintained its Overweight rating and $100.00 stock price target on Gilead Sciences (NASDAQ:GILD), as the company's first-half sales and COVID trends indicate a strong performance for its antiviral drug Veklury. The bank's analysis suggests that the third-quarter hospitalization rates in the United States are consistent with the same period in the previous year and show an increase from the second quarter, hinting at a significant earnings beat.
According to Wells Fargo's estimates, Gilead is expected to surpass consensus expectations by approximately $150 million, with Veklury sales projected around $260 million. This forecast is based on the assumption that market expectations have been cautious, aligning with the company's guidance provided in February 2024. At that time, Gilead projected a 40% year-over-year decline in sales to $1.3 billion for 2024.
Despite the conservative outlook presented earlier this year, Gilead has communicated that it does not plan to revise its sales forecast until the third-quarter earnings are reported. However, Wells Fargo anticipates that the company might update its guidance within this quarter, given the current trajectory of Veklury sales.
The bank's commentary underscores the potential for Veklury to achieve sales exceeding $1.5 billion, surpassing the initial expectations set by Gilead. This optimistic stance is based on observed trends and current market conditions, suggesting a positive outlook for the pharmaceutical company's financial performance in the near term.
In other recent news, Gilead Sciences has reported significant advancements in its antiviral research programs, with an emphasis on HIV and COVID-19. Notably, data from the Phase 3 PURPOSE 1 and PURPOSE 2 trials of lenacapavir, an injectable HIV-1 capsid inhibitor, revealed a 96% reduction in HIV infections, outperforming Truvada. Gilead is planning regulatory filings for lenacapavir as a preventative HIV treatment by the end of 2024.
In the oncology sector, Gilead's drug, Trodelvy, could potentially face less competition following AstraZeneca (NASDAQ:AZN)'s failed TROPION-breast-01 study. This development could reinforce Gilead's position in the market. Moreover, Gilead reported a 6% year-over-year rise in total product sales, driven by an 8% rise in sales for its HIV treatment, Biktarvy, and a 23% increase for Trodelvy.
Moreover, Gilead has entered agreements with six pharmaceutical manufacturers to produce and distribute generic versions of lenacapavir in 120 primarily low- and lower-middle income countries, pending regulatory approval. This move aligns with Gilead's strategy to broaden access to the medication for pre-exposure prophylaxis (PrEP) and treatment for heavily treatment-experienced adults with multi-drug resistant HIV.
Investment banking firms such as Mizuho, BMO Capital Markets, Goldman Sachs (NYSE:GS), and Morgan Stanley (NYSE:MS) have maintained their respective ratings on Gilead.
InvestingPro Insights
Gilead Sciences' recent performance aligns with Wells Fargo's optimistic outlook, as reflected in InvestingPro data. The company's market capitalization stands at $107.41 billion, underscoring its significant presence in the biotechnology sector. Gilead's revenue for the last twelve months reached $27.8 billion, with a modest growth of 1.54%, while its quarterly revenue growth accelerated to 5.36%, potentially supporting the anticipated strong performance of Veklury.
InvestingPro Tips highlight Gilead's financial strength and market position. The company has raised its dividend for 9 consecutive years, offering a current dividend yield of 3.58%. This consistent dividend growth, coupled with a high shareholder yield, suggests a commitment to returning value to investors. Moreover, Gilead's strong return over the last three months, with a price total return of 26.47%, aligns with Wells Fargo's positive outlook on the stock.
It is worth noting that InvestingPro offers 12 additional tips for Gilead Sciences, providing investors with a comprehensive analysis of the company's financial health and market position. These insights could be particularly valuable given the potential for Gilead to exceed earnings expectations and possibly revise its sales forecast upward.
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