Gilead downgraded at RBC Capital Markets after recent rally
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Gilead Sciences (NASDAQ:GILD) dipped in the -pre-market trading Tuesday after RBC Capital Markets downgraded it to Sector Perform from Outperform, noting that the biotech's shares are likely to settle at a new range following a ~40% gain from September lows.
With the recent rally taking Gilead (GILD) to "our probability-blended DCF fair value of $87 and peer multiples, we believe the stock is more likely to settle in at this new range in the coming year," the analyst Brian Abrahams wrote, yet maintaining the price target at $87.
While expecting Gilead's (GILD) management to continue "good operational execution," the team, however, thinks that "it will take time to gain more definitive visibility on the next sets of meaningful potential drivers."
Specifically, they cite concerns over how the company can replace its COVID-related revenue, convert its "HIV treatment and PrEP to longer life cycle injectables," and differentiate itself within large cancer markets such as those related to lung and breast.
The downgrade comes after Gilead (GILD) recorded ~11% YoY revenue growth in 2021 as its COVID-19 injection remdesivir, also known as Veklury, added $5.6B in sales globally with ~98% YoY growth.
In December, Seeking Alpha contributor Envision Research downgraded Gilead (GILD) to Hold, noting that its "return profile has weakened substantially given the valuation risks and fundamental uncertainties."