Mizuho has reaffirmed its Outperform rating with a steady price target of $90.00 for Gilead Sciences (NASDAQ: NASDAQ:GILD).
The positive stance comes in light of the recent announcement of interim results from the second Phase 3 trial of lenacapavir for HIV prevention, known as PURPOSE 2.
The trial demonstrated promising outcomes, with lenacapavir showing a 96% reduction in HIV infection compared to background HIV rates and an 89% greater effectiveness over the daily oral medication Truvada.
The study's findings are significant, with only two participants out of 2,180 in the lenacapavir group acquiring HIV, compared to nine infections among 1,087 participants on Truvada.
The long-acting drug, administered twice yearly, is designed for a diverse population including cisgender men, transgender men and women, and gender non-binary individuals.
Mizuho highlighted lenacapavir's potential as a key growth driver for Gilead Sciences, especially considering the current state of the US PrEP market, which is estimated to be only about one-third penetrated.
The firm anticipates market expansion due to increased adherence and the introduction of long-acting treatments like lenacapavir.
Gilead Sciences plans to file for approval of lenacapavir by the end of 2024. Mizuho's financial model estimates that peak worldwide sales of lenacapavir, without adjusting for risk, could reach approximately $4 billion. According to the firm, every additional $1 billion in sales could translate to an increase of about $2 to $3 in their discounted cash flow valuation of Gilead's stock.
InvestingPro Insights
In light of Mizuho's reaffirmed Outperform rating for Gilead Sciences (NASDAQ:GILD) and the promising trial results of lenacapavir, InvestingPro data provides additional context for investors considering the stock. Gilead's market capitalization stands at a robust $103.53 billion, reflecting its significant presence in the biotechnology industry. Despite a high Price/Earnings (P/E) ratio of 98.66, the adjusted P/E ratio for the last twelve months as of Q2 2024 is more moderate at 13.21, suggesting a potentially more reasonable valuation when considering the company's earnings.
The company's dividend yield is currently at 3.74%, which is noteworthy given that Gilead has raised its dividend for 9 consecutive years, a testament to its commitment to returning value to shareholders. This is consistent with the InvestingPro Tip highlighting Gilead's high shareholder yield. Moreover, the stock has seen a strong return over the last three months, with a total price return of 32.44%, indicating robust recent performance.
For investors seeking additional insights, there are 17 more InvestingPro Tips available, which include analysis on earnings revisions, stock volatility, and industry positioning. These tips could provide further guidance on the stock's potential performance, especially in the context of its upcoming plans to file for approval of lenacapavir. To explore these insights, visit https://www.investing.com/pro/GILD.
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