Last Update 06 Dec 25
Fair value Decreased 0.15%GILD: Extended HIV Franchise Will Offset Oncology And Policy Uncertainty Ahead
Analysts have nudged their blended price target for Gilead Sciences slightly lower by about $0.20 to the low-$130s, reflecting modestly higher discount rates and more conservative HIV and oncology growth and margin assumptions, even as they highlight extended Biktarvy exclusivity, encouraging Yeztugo uptake, and anito cel driven oncology optionality as key long term value drivers.
Analyst Commentary
Bullish analysts largely frame the recent price target tweaks as fine tuning within an increasingly constructive long term view, pointing to extended HIV cash flows, a strengthening PrEP opportunity, and optionality in oncology despite early stage competitive readouts.
Bullish Takeaways
- Several bullish analysts have lifted price targets into the mid to high $130s and low $140s, citing the extended U.S. Biktarvy exclusivity as a meaningful DCF tailwind that lengthens visible cash flow and supports a higher intrinsic value range.
- Revised models now assume a larger total addressable market for PrEP and faster uptake for Yeztugo, with HIV business growth expectations being raised from the low single digits to roughly mid single digits. This reinforces the view of a durable growth engine rather than a flattish cash cow.
- Oncology is increasingly described as a second growth pillar, with Trodelvy and the anito cel program viewed as key to medium term revenue acceleration. Early cell therapy competitors are seen as too immature to materially undercut the franchise in current valuation frameworks.
- New coverage initiations and inclusion in broader large cap biopharma buy lists are framed as evidence that the sector wide derating has created an appealing entry point. Gilead is screened as a beneficiary of the next innovation wave and improving execution across HIV, liver disease, and oncology launches.
Bearish Takeaways
- Bearish analysts and more neutral voices highlight ongoing execution risk in next generation HIV programs, including recent trial terminations. These developments reinforce concerns around the company’s ability to seamlessly evolve the franchise as long acting competitors and novel mechanisms emerge.
- Within oncology, cell therapy is still characterized as facing competitive pressure and mixed recent results, tempering near term expectations for margin expansion and limiting how much upside some analysts are willing to embed in base case valuation scenarios.
- The small patient numbers and limited follow up in early competitive cell therapy datasets make cross program comparisons difficult. This sustains uncertainty around anito cel’s ultimate differentiation and raises the risk that market share and pricing assumptions prove overly optimistic.
- Policy and pricing overhangs remain a recurring theme, with some cautious analysts flagging that Gilead may be more exposed than peers to potential drug price reforms. This could cap multiple expansion even if operational execution remains solid.
What's in the News
- Truist raised its Gilead price target to $145 from $127 and reiterated a Buy rating, citing a stable base business, improving HIV PrEP execution, and mixed but still promising oncology trends (Truist periodical).
- Gilead began delivering first shipments of twice yearly injectable lenacapavir for HIV PrEP to Eswatini and Zambia. This advances plans for broad, low cost access across sub Saharan Africa through voluntary licenses and no profit supply commitments (company key development).
- Positive Phase 3 ARTISTRY 1 topline data showed that a once daily single tablet regimen combining bictegravir and lenacapavir maintained viral suppression when patients switched from complex multi tablet HIV regimens, with no new safety concerns (company key development).
- New data for Livdelzi in primary biliary cholangitis reinforced durable three year efficacy, liver stiffness improvements, and a favorable safety profile. In addition, Health Canada granted conditional approval for Lyvdelzi as a second line PBC therapy (company key developments).
- Trodelvy headlines recent oncology updates. A Phase 3 ASCENT 03 win in first line metastatic triple negative breast cancer was contrasted by a miss on progression free survival in the ASCENT 07 HR positive/HER2 negative breast cancer study, while overall survival trends remain under evaluation (company key developments).
Valuation Changes
- Fair Value Estimate has edged down slightly from approximately $130.83 to $130.63, reflecting modestly more conservative assumptions.
- Discount Rate has risen slightly from about 7.26 percent to 7.29 percent, indicating a marginally higher required return on capital.
- Revenue Growth has been trimmed from roughly 3.89 percent to 3.68 percent, signaling a modestly softer long term top line outlook.
- Net Profit Margin has declined from about 32.21 percent to 31.28 percent, incorporating slightly lower long term profitability expectations.
- Future P/E has increased from around 18.8x to 19.5x, implying a modestly higher valuation multiple on forward earnings.
Key Takeaways
- New product launches and expanded global access are driving revenue growth and improving Gilead's product mix, reducing reliance on legacy drugs.
- Strong cash flow and disciplined expense management enable share buybacks and margin expansion, supporting sustainable earnings and capital returns.
- Heavy reliance on HIV therapies and exposure to regulatory, patent, and competitive risks threaten Gilead's long-term revenue growth and profitability despite pipeline diversification efforts.
Catalysts
About Gilead Sciences- A biopharmaceutical company, discovers, develops, and commercializes medicines in the areas of unmet medical need in the United States, Europe, and internationally.
- Demographic changes are expanding Gilead's end-markets, as a growing global population living with chronic conditions (like HIV and cancer) creates sustained demand for advanced therapies and prevention, supporting multi-year revenue growth (evidenced by high double-digit growth in HIV prevention/treatment and robust pipeline advancements).
- The company is leveraging increasing healthcare access and spending across geographies, highlighted by new product launches and expanded access/partnerships for Yeztugo (lenacapavir) in both developed and emerging markets-expected to materially boost international revenues and contribute to top-line acceleration.
- The launch and scaling of innovative products (Yeztugo, Trodelvy first-line, Livdelzi) position Gilead to deliver a more favorable product mix and premium pricing, driving higher gross margins and improving long-term earnings trajectory as portfolio diversification reduces overexposure to legacy products.
- Disciplined operating expense management and expanded share buybacks backed by strong free cash flow are increasing efficiency, supporting progressively higher operating margins and EPS growth; updated guidance reflects confidence in operating leverage and capital returns.
- An expanded pipeline in oncology, cell therapy, and next-generation HIV regimens set Gilead up for multiple new product launches by 2030, pointing to a prolonged innovation cycle likely to increase recurring revenue and insulate long-term earnings from generic erosion.
Gilead Sciences Future Earnings and Revenue Growth
Assumptions
How have these above catalysts been quantified?- Analysts are assuming Gilead Sciences's revenue will grow by 3.8% annually over the next 3 years.
- Analysts assume that profit margins will increase from 21.9% today to 31.0% in 3 years time.
- Analysts expect earnings to reach $10.0 billion (and earnings per share of $8.08) by about September 2028, up from $6.3 billion today. However, there is some disagreement amongst the analysts with the more bearish ones expecting earnings as low as $8.0 billion.
- In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 18.7x on those 2028 earnings, down from 22.8x today. This future PE is greater than the current PE for the US Biotechs industry at 15.3x.
- Analysts expect the number of shares outstanding to decline by 0.44% per year for the next 3 years.
- To value all of this in today's terms, we will use a discount rate of 6.96%, as per the Simply Wall St company report.
Gilead Sciences Future Earnings Per Share Growth
Risks
What could happen that would invalidate this narrative?- Policy and pricing headwinds pose long-term risk: Ongoing and potential new government regulations (e.g., Medicare Part D redesign, Medicaid MFN proposals, legislative changes) could further compress realized prices and cap long-term revenue growth-even as HIV demand increases globally.
- Key products face future patent cliffs: Management highlights limited patent exposure until 2033, but after this period, Gilead's reliance on blockbuster HIV drugs like Biktarvy and Descovy exposes it to generic competition, threatening base business revenues and margins as exclusivity ends.
- Heavy dependence on HIV leaves earnings vulnerable: While launching new products (e.g., Yeztugo) expands the portfolio, the company's substantial earnings reliance on HIV therapies subjects it to risk from shifting treatment paradigms, technological disruption (such as potential new long-acting or curative therapies), and competitive launches, potentially undermining long-term revenue resilience.
- Execution risk in pipeline diversification and market access: Success of new launches in oncology (Trodelvy, anito-cel) and international PrEP markets is not guaranteed-delays in regulatory approvals, slower-than-expected uptake due to prescriber or logistical barriers, or reimbursement/access challenges (mentioned for Europe and low/middle-income countries) could constrain future revenue growth and profitability.
- Increasing industry competition and R&D cost pressure: Intensified rivalry in key categories (HIV, oncology, cell therapy) requires sustained high levels of investment in R&D and commercialization; failure to consistently deliver further practice-changing therapies or an inability to secure premium pricing may compress margins and net earnings in the long term.
Valuation
How have all the factors above been brought together to estimate a fair value?- The analysts have a consensus price target of $124.91 for Gilead Sciences based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $143.0, and the most bearish reporting a price target of just $98.0.
- In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $32.3 billion, earnings will come to $10.0 billion, and it would be trading on a PE ratio of 18.7x, assuming you use a discount rate of 7.0%.
- Given the current share price of $115.76, the analyst price target of $124.91 is 7.3% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
- We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.
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Disclaimer
AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.
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