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Shares of Gilead Sciences Inc (NASDAQ:GILD) are up about 3% in pre-open Tuesday after JPMorgan upgraded to Overweight from Neutral with a price target of $80 per share (up from $72).
The investment bank says the GILD story is “becoming less controversial” amid the increased visibility on the company’s HIV franchise.
“We have GILD’s HIV franchise growing a low single digit CAGR through the early 2030s. During this time, we see Biktarvy (2033 IP) remaining the dominant product in the treatment market with revenues growing from $10.2bn in 2022 to $12.5bn in 2025 and Descovy (2031 IP) as well-positioned in PrEP.,” JPMorgan wrote to clients.
Moreover, the emerging oncology franchise is also not adequately reflected in GILD’s valuation, which only reflects Gilead’s HIV franchise. Hence, investors practically get the oncology franchise for free at the current market price, JPMorgan said.
“With an oncology franchise that we forecast to reach ~$5bn in sales by 2030 as well as potential upside to lenacapravir estimates over time, we see shares as clearly undervalued at current levels,” JPMorgan added in a client note.
Moreover, the bank argues that the Gilead story will become less controversial going forward as far as the M&A activity is concerned. This should be a result of the company prioritizing “smaller, tuck-in acquisitions going forward.”
GILD stock price is up 3.2% in pre-open trading Tuesday.
