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Truist Securities downgrades Gilead shares to hold, cuts price target to $82 amid re-strategizing

Published 02/22/2024, 07:30 PM
Updated 02/22/2024, 07:30 PM
©  Reuters

On Thursday, Gilead Sciences (NASDAQ:GILD) experienced a shift in stock rating as Truist Securities altered its stance from Buy to Hold, adjusting the price target to $82 from the previous $91. The biopharmaceutical company, known for its work in the treatment of HIV, liver diseases, and oncology, is refocusing its strategy on chemotherapy combinations in lung and other large markets.

Truist Securities acknowledged the strategic move by Gilead Sciences to concentrate on chemotherapy combinations as a smart and cost-efficient approach, particularly in the development of treatments in neoadjuvant and adjuvant lung cancer, where competition is less intense compared to first-line metastatic non-small cell lung cancer (mNSCLC). The firm noted that while the strategy is clever, it is expected to require time to come to fruition.

The focus among investors in the oncology sector is on the upcoming trial readouts for STAR-121/221, which are anticipated to be released in 2025 or later. Due to the timing of these data readouts, Truist Securities predicts that Gilead's stock may not see significant movement until the top-line data becomes available.

In the HIV segment, investor attention is centered on the growth of Gilead's product Lenacapavir for pre-exposure prophylaxis (PrEP) and the company's goal to increase the number of patients on long-acting treatments by 2030. Clinical trial results in this area are expected to be published in 2024. Truist Securities suggests that investors are likely to look for evidence of successful execution of these plans in 2025 and beyond.

The revised price target of $82 reflects a more cautious outlook on Gilead Sciences' stock performance in the near term, as the market awaits key trial outcomes and the execution of the company's long-term strategies.

InvestingPro Insights

As Gilead Sciences (NASDAQ:GILD) undergoes a strategic shift with a focus on chemotherapy combinations, real-time metrics from InvestingPro provide a snapshot of the company's financial health and market performance. Gilead's current Market Cap stands at approximately $3.74 billion, indicating a significant presence in the biopharmaceutical industry. Furthermore, the company's Price/Earnings (P/E) Ratio, a measure of its current share price relative to its per-share earnings, is 26.77, with a slightly lower adjusted P/E Ratio for the last twelve months as of Q3 2023 at 25.57.

Investors considering Gilead's stock will find reassurance in the company's Gross Profit Margin of 47.32% for the same period, which reflects the efficiency of its operations and its ability to generate profit from sales. Additionally, the Revenue Growth for the last twelve months as of Q3 2023 was reported at 7.47%, demonstrating the company's ability to increase its earnings over time.

Two InvestingPro Tips that are particularly relevant to Gilead Sciences at this juncture include the company holding more cash than debt on its balance sheet, which suggests a strong financial position, and the anticipation of sales growth in the current year by analysts, aligning with the company's strategic focus on expanding its oncology portfolio.

For investors seeking more in-depth analysis and additional tips, InvestingPro offers a comprehensive list of insights, including the fact that Gilead has maintained dividend payments for 12 consecutive years, which could be a sign of the company's commitment to shareholder returns. There are a total of 7 additional InvestingPro Tips available for Gilead Sciences, which can be accessed for further informed investment decisions. To take advantage of these insights, investors are encouraged to use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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