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Gilead Ratings Cut by Analysts on Caution About Virus-Drug Profitability

Three analysts cut their ratings on Gilead Sciences shares. They caution that the company's coronavirus drug might not generate much profit.

Gilead Sciences  (GILD) - Get Gilead Sciences, Inc. (GILD) Report shares fell Friday as three analysts cut their ratings on the stock following Thursday’s first-quarter earnings report.

They voiced caution about the profit potential of the biotechnology titan’s experimental coronavirus treatment drug, remdesivir. 

The Foster City, Calif., company reported better-than-expected profit and revenue for the first quarter.

J.P. Morgan’s Cory Kasimov lowered his rating to neutral from overweight and left his share-price target steady at $84. 

The stock already has reached that level, with a surge of 84% year to date, he noted in a commentary, according to The Fly.

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Approval of Gilead’s remdesivir is imminent, he said. But he doesn’t see “any other levers to pull in our model at this time."

Remdesivir probably won’t produce long-term cash flows for Gilead, as the company has promised to keep it affordable after initially giving it away.

SunTrust analyst Robyn Karnauskas downgraded Gilead to sell from hold, keeping his share-price target at $70. He, too, notes that it won’t be easy for Gilead to make a profit from remdesivir, The Fly reports.

Raymond James analyst Steven Seedhouse downgraded Gilead to market perform from outperform and refrained from offering a price target. He also sees an unclear path to profit for remdesivir, The Fly reports.

Meanwhile, Piper Sandler analyst Tyler Van Buren affirmed his overweight rating and $90 price target. He noted that the company seeks to ensure that remdesivir is a "sustainable business."

Gilead shares recently traded at $79.47, down 5.4%. The stock has jumped 26% over the past three months, compared with a 12% slide for the S&P 500.