Gilead Up on Patent-Dispute Win and Morgan Stanley Upgrade

This a “pivotal pipeline year” for Gilead, Morgan Stanley said. It upgraded the stock to overweight from equal weight.
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Gilead Sciences  (GILD) - Get Report shares rose Tuesday after the Supreme Court ruled in its favor in a patent dispute and Morgan Stanley upgraded the biotechnology giant to overweight from equal weight.

Morgan Stanley analyst Matthew Harrison also raised his price target on the Foster City, Calif., company to $83 from $67.

Years of transformation for Gilead could “yield positive results in 2021 driven by clarity on extending the HIV franchise into 2040 and a new growth opportunity from Trodelvy in HR+ breast cancer,” he wrote in a commentary cited by Bloomberg.

Harrison called 2021 a “pivotal pipeline year” for Gilead.

Gilead stock recently traded at $67.05, up 5.9%. It has climbed 7% in the past year.

As for the Supreme Court, it turned down a case from Merck’s  (MRK) - Get Report Idenix unit to restore a $2.5 billion damage award originally won against Gilead at trial. Idenix claimed that Gilead violated its patent for a hepatitis C treatment.

The Supreme Court decided not to hear Merck’s argument that an appeals court was wrong to reject its patent for compounds related to hepatitis C treatment.

Morningstar analyst Karen Andersen puts fair value for Gilead’s stock at $77.

“Gilead Sciences generates stellar profit margins with its HIV and HCV portfolio, which requires only a small salesforce and inexpensive manufacturing,” she wrote in a commentary earlier this month. 

“We think its portfolio and pipeline support a wide moat, but Gilead needs HCV market stabilization, strong continued innovation in HIV, solid pipeline data, and smart future acquisitions to return to growth.”

Merck recently traded at $83.20, down 0.2%.