Gilead Sciences (GILD) stock forecast - where next for the biopharma firm?
Gilead Sciences (GILD) is a US biopharmaceutical company with a portfolio of products including HIV treatments, oncology therapies and Veklury – an antiviral better known as remdesivir – used as a treatment for Covid-19.
Fourth-quarter results revealed disappointing earnings figures, as legal settlement charges hit its bottom line. But Gilead claims it has “all the elements in place for a strong year and a strong decade”. We take a look at what 2022 holds for the GILD future stock price.
Gilead stock performance
The past five years have seen the Gilead share price fluctuate significantly. It reached a five-year high of $85 in January 2018, with investors reacting favourably to announcements about clinical trials for a lymphoma treatment.
Spring 2020 saw another period of share price growth, with Gilead stock value increasing from around $63 in January to $83 in April – a rise of over 30%. This growth was largely driven by positive trial results, including use of the antiviral Veklury on Covid-19 patients.
Yet treatment results have also driven Gilead’s worst stock market performance over the past five years. In August 2020, the pharma firm suffered from a significant regulatory setback, as Gilead issued a press release stating that it had received a response from the FDA for its New Drug Application for filgotnib, a rheumatoid arthritis treatment.
According to their press release, the FDA expressed concerns about the risk/benefit profile of the treatment, as well as its impact on male fertility.
While Gilead responded that it continued to believe in the benefit/risk profile of the treatment thanks to trial results, the share price nevertheless dropped by over 15% between August and October 2020.
Disappointing fourth-quarter figures released on 1 February 2022 then saw the share price fall by more than 6% in the day following the results release.
In terms of technical GILD stock analysis, the relative strength index (RSI) for Gilead was neutral at 42.54 at the time of writing (2 February). A move in the RSI below 30 signals the asset is being oversold and undervalued.
Meanwhile, a level of 70 or above would indicate an overvalued or overbought condition. The current value therefore does not signal the price is about to undergo a significant correction.
Q4 results update
In the most recent GILD stock news, the company’s fourth-quarter results were a mixed bag, with strong treatment sales countered by significant cost increases.
Gilead reported non-GAAP (generally accepted accounting practice) earnings per share (EPS) of $0.69 (and GAAP EPS of $0.30), which was significantly below analysts’ GILD earnings forecasts of $1.58 EPS.
Total fourth-quarter revenues of $7.2bn (£5.3bn) represented a decrease of 2% on the prior-year quarter, with the dip driven by decreased demand for Covid-19 treatment Veklury.
Gilead’s bottom line was also hit by a $1.25bn charge related to a legal settlement over its Biktarvy treatment in a dispute with ViiV Healthcare, and a charge of $625m from a collaboration opt-in. These combined to represent a $1.18 hit to EPS.
But in more positive news, Q4 saw HIV product sales increase by 7% to $4.5bn, whilst cell therapy product sales increased 47% on the prior year quarter, reaching $239m.
According to Zacks Investment Research, Gilead Sciences has a price to earnings (P/E) ratio of 9.39X .81, against an industry average of 20.85X for the Biomedical and Genetics industry.
Joining the fight against Covid-19
In early 2020, Gilead examined the potential of an investigational antiviral, Veklury, which had shown potential utility against other coronaviruses in earlier experiments.
By May 2020, the FDA had granted Emergency Use Authorization for the drug, and it was approved for treatment of hospitalised Covid-19 patients in October of the same year.
By the end of 2021, over nine million patients had been treated with Veklury, and it generated approximately 23% of Gilead’s Q3 revenues – almost $2bn in total. But Q4 results reported that Veklury sales had decreased by 30% on the prior year quarter, with rates of Covid-19 infections, hospitalisations and vaccinations all affecting its roll-out.
And there remains considerable uncertainty about its future path as we wait to see whether the pandemic will recede, or settle into seasonal surges.
In a presentation to investors, Gilead acknowledged this uncertainty, stating that “If – as we hope – the pandemic recovery continues, we would expect to see Veklury sales moderate considerably”.
“It remains to be seen whether Covid-19 becomes a seasonal phenomenon, similar to flu, which would impact how we view Veklury’s adoption in the future,” the company said.
Antiviral rivals
Even if the course of the pandemic does necessitate antiviral treatment, the market has recently become more saturated.
In late December 2021, the FDA gave Emergency Use Authorization for Pfizer’s Paxlovid, an oral treatment for mild-to-moderate coronavirus cases. The following day, the body also issued EUA for Merck’s Monupiravir antiviral treatment.
As of November 2021, three in five patients hospitalised in the US were treated with Veklury. Yet this number could decline if the adoption of its rivals grows.
HIV treatment pipeline
HIV treatments generate the majority of Gilead’s revenue – 56% as of Q3 2021.
Fourth-quarter results saw HIV product sales up 7% on the prior-year quarter. Gilead’s flagship treatment, Biktarvy, is currently the US’s most prescribed regimen and saw a 22% year-on-year sales increase. Gilead also has another treatment, Lenacapavir, at trial stage.
Expensive settlement
Yet could Gilead’s Biktarvy revenues be at risk? Though Gilead’s fourth-quarter results reported a $1.25bn charge relating to a legal settlement, it did not disclose further details. However, a 1 February press release from GSK announced a settlement with Gilead Sciences, “resolving litigation relating to Biktarvy”.
According to this announcement, Gilead will make an upfront payment of $1.25bn to Viiv Healthcare (an HIV specialist majority-owned by GSK) and also pay a 3% royalty on future US sales of Biktarvy. With US sales of $7bn in 2021, this has the potential to represent a significant financial hit for the firm.
Regulatory risk
As well as litigation risk, Gilead also faces a considerable burden of regulatory risk, foreshadowed by the August 2020 FDA report into filgotinib.
Following the FDA’s response, GIlead discontinued efforts on the treatment, and transferred all rights to the European markets to its development partner, Galapagos.
This episode highlighted the very real regulatory risk facing pharmaceutical companies, even those with ‘wide moats’ – competitive advantages that offer protection from market rivals.
According to Morningstar Healthcare Strategist, Karen Anderson, this risk must be balanced against Gilead’s strengths.
“Anderson thinks the firm does face environmental, social, and governance risks, particularly related to potential US drug price-related policy reform (Gilead sees more than 70% of its sales from the U.S. pharmaceutical market) and ongoing potential for product governance issues (including litigation),” said a December Morningstar report.
“While she factors these threats into our analysis, she doesn’t see them as material to our valuation or moat rating,” the report added.
Anderson assigned Gilead a wide economic moat rating in December 2021, citing its research and development strategy’s focus on infectious diseases and single pill formulations as one of the firm’s strongest intangible assets.
Gilead Sciences (GILD) stock forecast 2022
According to data from MarketBeat, Gilead had a consensus ‘Buy’ recommendation at the time of writing (2 February), though analysts were split with nine ‘Buy’ ratings, eight ‘Hold’, and zero ‘sell’.
GILD stock price targets for the next twelve months varied from a low of $66 to a high of $100, with an average analyst price target of $77, a 18.61% upside on the current (2 February) share price.
Sixteen analysts cover Gilead Sciences, with late 2021 seeing Goldman Sachs, Wells Fargo and Piper Sandler initiate coverage on the stock with a ‘neutral’/’equal weight’ rating.
18 January saw Morgan Stanley’s Matthew Harrison issue an ‘equal weight’ rating, lowering his Gilead stock price prediction from $74 to $72, which represented a 1.72% upside on the report date share price.
Three days before Q4 results release, analysts at Argus upgraded their Gilead rating from ‘hold’ to ‘buy’, and set a price target of $75, an 11.49% upside on the report date (28 January) share price.
Disappointing Q4 results released on 1 February 2022 triggered a flurry of analyst activity, with Wells Fargo, Royal Bank of Canada, BMO Capital, Bank of America, Truist Financials and Morgan Stanley all lowering their Gilead stock projections.
All of the revised price targets still represented an upside on the report date share price. Wells Fargo represented the lowest revised price target at $70 (a 2.23% upside), while Royal Bank of Canada was the highest at $85 (a 24.14% upside).
It’s worth noting that analyst predictions are frequently wrong and forecasts are no substitute for your own research. Always perform your own due diligence before investing and never invest or trade money you can’t afford to lose.
Gilead Sciences stock forecast for 2030
According to WalletInvestor’s long-term algorithmic Gilead share price forecasts, the stock is projected to drop to $65.55 by January 2023 and dip to $63.44 by January 2024.
The site forecasted the share price to fall to $61.75 in January 2025, $59.43 in January 2026, and $57.46 in January 2027.
Note that algorithm-based predictions can also be inaccurate as they are based on past performance, which is no guarantee of future results.
Forecasts shouldn’t be used as a substitute for your own research. Once again, always perform your own due diligence before investing, and never invest or trade money you can’t afford to lose.
FAQs
Is GILD stock a good buy?
According to data from MarketBeat, analysts rate Gilead a consensus ‘buy’, with nine ‘buy’ ratings, eight ‘hold’, and zero ‘sell’.
It’s worth noting that analyst predictions are frequently wrong and forecasts are no substitute for your own research. Always perform your own due diligence before investing and never invest or trade money you can’t afford to lose.
Why has the Gilead Sciences share price been going down?
Q4 results saw Gilead report lower than expected earnings, and a significant legal settlement charge. The day after the results release saw the Gilead share price drop by over 6% as investors reacted to the GILD stock news. Note that past performance is no guarantee of future results
Will GILD stock go up or down?
GILD stock price targets for the next twelve months varied from a low of $66 to a high of $100, with an average analyst price target of $77, a 18.61% upside on the current (2 February) share price.
It’s worth noting that analyst predictions are frequently wrong and forecasts are no substitute for your own research. Always perform your own due diligence before investing and never invest or trade money you can’t afford to lose.
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