Deutsche Bank commented on Gilead Sciences, Inc. (NASDAQ: GILD) Monday and maintained a Buy rating with a $125 price target.
Analysts, led by Robyn Karnauskas, noted that the firm’s survey indicated that the reimbursement process was easing with more previously undiagnosed patients getting treatment. Doctors expected “the faster uptake in warehoused patients in 2015/16″ with 85 percent of warehoused patients expected to be treated by 2016,” she added.
The analysts increased the 2015/16 treatment rates from 250K/262K to 278K/294K to account for greater access, which increased the 2015/16/17 EPS estimates from $9.03/$9.26/$9.62 to $9.47/$10.39/$10.45.
“While we feel bullish about HCV franchise in near term which could increase near term cash flow, we are lowering the numbers in out years as the patient pool deplete in our model. Overall, these changes are NPV neutral in our model, the note explained.
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Commenting on the 2015 consensus, Karnauskas said that the estimates “could be achievable” with the projections at $10.7 billion annual sales in the U.S.
“Assuming 46 percent rebates and 95 percent compliance,” the $10.7 billion in sales calculated “to ~250K patients treated with Sovaldi/Harvoni. This seems to be higher than what GILD thinks of capacity (250K for entire HCV market/yr – for GILD and ABBV combined). However, we note that IMS is trending in that direction suggesting ~250K annual treatments with GILD drugs.”
To account for the risk of Merck & Co., Inc. (NYSE: MRK) launching competing treatments in mid-2016, the analysts increased discounts in the financial model from 46 percent to 54 percent by 2018 with no price increases.
The firm expected 2015 EPS of $9.47 on revenues of $27.62 billion. The price target was based on a 12x multiple, down from 13.5x.
Gilead Sciences, Inc. recently traded at $98.30, down 0.13 percent.
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