We initiate with a Strong Buy / $181 PT on GILD. Gilead discovers, develops, and commercializes transformative therapies in the areas of HIV, viral hepatitis, oncology, and other unmet medical needs globally.
Below the classic biopharma shell, we see a new operating paradigm playing out, rewarding the company's disciplined cost base and accelerating mix shift. Q1-25 execution already bodes well, as operating margin reached 43% on an 8% SG&A decline, setting FY EPS at the upper end of guidance and laying the groundwork for consensus outperformance.
Beyond, we see GILD's late-stage pipeline inflection, driven by a full-scale lenacapavir-PrEP launch, re-accelerating HIV franchise growth, and a potential Trodelvy readout in mBC, supporting durable high-teens earnings growth into FY26E and reaching $8.60 EPS (consensus $8.53).
We see this visibility supporting our 21.0x forward P/E multiple, which sets the stock's fair value above GILD's historical levels, but in contrast with sector peers trading at 22.7x. We see this multiple supporting our $181 PT, which provides 65% upside and a compelling 37.9% annualized return over 1.5 years, without the need for heroic top-end revenue assumptions or sector-wide macro tailwinds.
We acknowledge the ongoing insider selling (particularly the CFO this year) as a cautionary sign and a cap on a higher multiple. Even so, the combination of near-term execution, pipeline momentum, and a rapidly accelerating cash conversion should tilt the R/R ratio decisively in favor of new capital.