Gilead raised to Overweight at J.P. Morgan on prospects in HIV and cancer
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Gilead (NASDAQ:GILD) shares gained pre-market Tuesday after J.P. Morgan upgraded the biotech to Overweight from Neutral, citing improved clarity on the company's HIV franchise and an emerging but underappreciated oncology franchise.
The analysts with an $80 December 2023 price target on the stock point to a recent settlement Gilead (GILD) reached with several generic drugmakers on patents covering tenofovir alafenamide, a component used in HIV medications.
In addition, the firm cites long terms opportunity in lenacapavir, an experimental HIV therapy currently under FDA review with a target action date on Dec. 27.
"At current levels, we see GILD's HIV business alone supporting the stock's entire market cap," the analysts wrote.
With GILD's cancer portfolio expected to add approximately $5B in sales by 2030, the analysts argue that the stock is "clearly undervalued at current levels," as they cite further upside to lenacapavir estimates and an undervalued HIV franchise. 
"â¦.while GILD's acquisition track record represents a point of controversy in the story," the analysts expect GILD to focus its capital deployment on smaller tuck-in acquisitions.
In March, Barclays trimmed the price target on GILD, citing underwhelming late-stage data for breast cancer therapy Trodelvy which was added to the company's oncology portfolio with the $21B acquisition of Immunomedics in 2020.