Report
Steve Chesney

FY18 exposes deepening conundrum

We reflect recent updates on HCV price/share erosion, and with an expected steady decline in patient flow our FY22 estimates are now 30% below consensus. While HIV generic headwinds will likely be offset by the B/F/TAF launch, the resulting mix shift is likely to sharply reduce profitability and our FY21/22 EPS ests. are 8% and 20% below consensus. Our scenario analysis suggests covering the growth gap with a "KITE-like" acquisition strategy is fraught with risk, potentially reducing ROIC to 10% vs 26% base case. Based on revisions to HCV/HIV and inclusion of Yescarta, our DCF-derived price target moves to $65 ($61 prior) and we maintain Neutral.
Underlying
Gilead Sciences Inc.

Gilead Sciences is a research-based biopharmaceutical company that discovers, develops and commercializes medicines. The company's primary areas of focus include viral diseases, inflammatory and fibrotic diseases and oncology. The company's products include: Biktarvy for the treatment of HIV-1 infection in certain patients; Vosevi?, a single tablet regimen of sofosbuvir, velpatasvir and voxilaprevir for the re-treatment of chronic hepatitis C virus infection in adults; Vemlidy? for the treatment of chronic hepatitis B virus infection in adults with compensated liver disease; and Yescarta (axicabtagene ciloleucel) for the treatment of adult patients with relapsed or refractory large B-cell lymphoma.

Provider
Atlantic Equities
Atlantic Equities

Formed in 2003 by an established team from Cazenove, one of the most respected investment banks in the UK, Atlantic Equities conducts and publishes fundamental, bottom up research on mid and large cap US companies.

Atlantic provide order execution through a wide range of DMA products and algorithmic trading suites.

Analysts
Steve Chesney

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