Gilead Sciences Shares Rise 6% After U.S. FDA Approves Remdesivir for COVID-19 Treatment; Target Price $75

Gilead Sciences Inc, an American biopharmaceutical company that researches, develops and commercializes drugs, said that the U.S. Food and Drug Administration has approved the antiviral drug remdesivir for the COVID-19 treatment, sending its shares up about 6% in pre-market on Friday.

Previously authorized by the FDA for emergency use to treat COVID-19, remdesivir is now the first and only approved COVID-19 treatment in the United States. The drug is now widely available in hospitals across the country, following early investments to rapidly expand manufacturing capacity to increase supply, the company.

Following this announcement, Gilead Sciences shares rose about 6% to $64.11 in pre-market trading on Friday; however, the stock is down nearly 7% so far this year.

Executive comments

“The approval of Veklury (remdesivir) marks an important milestone in efforts to help address the pandemic by offering an effective treatment that helps patients recover faster and, in turn, helps preserve scarce healthcare resources,” said Barry Zingman, MD, Professor of Medicine at the Albert Einstein College of Medicine and Montefiore Medical Center, New York.

“The availability of a rigorously tested treatment that can significantly speed recovery and offers other benefits such as lower rates of progression to mechanical ventilation, provides hospitalized patients and their families important hope and offers healthcare providers a critical tool as they care for patients in need.”

Gilead Sciences Stock Price Forecast

Twenty-one equity analysts forecast the average price in 12 months at $79.38 with a high forecast of $105.00 and a low forecast of $67.00. The average price target represents a 30.84% increase from the last price of $60.67. From those 21 equity analysts, nine rated “Buy”, ten rated “Hold” and two rated “Sell”, according to Tipranks.

Gilead Sciences had its target price reduced by Royal Bank of Canada to $82 from $84. They currently have an outperform rating on the biopharmaceutical company’s stock. Citigroup lowered their price target to $75 from $80 and Jefferies cut price target to $75 from $78.

Several other analysts have also recently commented on the stock. Maxim Group raised Gilead Sciences from a hold rating to a buy rating and set a $88 price objective. Oppenheimer lifted their price objective to $105 from $90 and gave the stock an outperform rating. BidaskClub lowered their rating to a strong sell from a sell in July.

We think it is good to hold for now as 100-day Moving Average and 100-200-day MACD Oscillator signal a selling opportunity. However, in the best-case scenario target price $75.

Analyst Comments

“The ongoing pandemic impacted Gilead’s sales for both the HCV and HIV franchises, which caused fewer health care provider visits and screenings. HIV sales are impacted by lower sales volume of Truvada. Meanwhile, the company lifted its annual guidance probably to account for sales from its antiviral drug remdesivir for COVID-19. Nevertheless, the strong performance of Biktarvy maintains a solid momentum. Gilead is seeing early signs of recovery from this impact and expects a full rebound by the second half. Increase in demand for remdesivir should boost the top line. Shares have outperformed the industry in the past year. However, the prospects of remdesivir will be hit once a vaccine is out,” noted equity analysts at ZACKS Research.

“Gilead’ strong HIV franchise should help the company maintain momentum. Newly launched products should continue to perform well, thereby driving top-line growth. (But) Weaker-than-expected performance of HCV franchise due to lower sales of Harvoni and Sovaldi is concerning. Pipeline setbacks and stiff competition remain a threat as well.”

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