Seeking Alpha

Gilead Sciences upgraded at Baird as Sovaldi looks like a blockbuster

  • Gilead Sciences (GILD +3.7%) is upgraded to Outperform from Market Perform with a $103 price target, up from $65, at Baird even after shares have nearly doubled in the past year.
  • Initial prescription data for sales of hepatitis C drug Sovaldi are so massively outperforming even the biggest weeks Vertex's Incivek ever had, the firm believes any reasonable comparison between the two drugs would indicate that U.S. sales in 2014 alone will exceed $5B; Sovaldi also enjoys a ~70% price premium over Incivek.
  • Even competition with Abbvie (ABBV) is positive because the data justifies some meaningful penetration by Abbvie’s regimen without having to resort to price as a lever, the firm adds.
Comments (4)
  • GILD reports Q4 2013 results after the close today. The key will be the 2014 guidance that they will also provide. Estimates for its Hepatitis C franchise have moved up to the $3.5-$5.0 billion range, while I remain at $8.0 bil. The current prescription trend in the US, combined with the introduction in the EU, is running ahead of even my projection. The company is typically conservative, so it shall be interesting. Overall, I expect GILD to achieve the consensus 2015 EPS estimate in 2014.
    Len
    4 Feb, 12:21 PM Reply Like
  • Isn't ABBV's efficacy and price superior?
    4 Feb, 04:23 PM Reply Like
  • Great article and great comments Len, especially the conservative aspect. I expect a great deal of sandbagging in their guidance but I am staying long.
    4 Feb, 12:59 PM Reply Like
  • AbbVie's efficacy is excellent, as is Gilead's. The AbbVie regimen will be contraindicated in a small percentage of patients, and still includes ribavirin. The price for AbbVie has yet to be determined, and its management has stated that it does not view price as a key selling point. New weekly prescription data will be available Friday, and I would expect this weekly information to drive Gilead's stock. No question that Gilead's stock price in 2014 will be Hepatitis C-based. However, it must be noted that the company has an impressive pipeline in oncology, fibrosis and anti-infectives. My 2014 Hepatitis C related revenue estimate remains $8 billion, and my target price is $140. As an aside (I have written about this previously), Cambrex could be a derivative beneficiary of the Sovaldi launch. Len
    5 Feb, 07:13 PM Reply Like
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