Bank of America Says Gilead's Remdesivir Offers 'Little Lasting' Profit Upside

Bank of America maintains a neutral rating on Gilead shares, telling investors to be cautious about the stock’s perceived new upside.
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Gilead Sciences  (GILD) - Get Report was one of the market’s top performers Monday after the World Health Organization said the drugmaker's antiviral remdesivir may be effective against the coronavirus but a cautious Bank of America dented some of the enthusiasm for the stock/

Gilead Sciences shares were rising 3.1% to $71.87 on Monday but had risen about 6% earlier in the session. 

Bank of America published a note Monday maintaining a neutral rating and $72 price target on Gilead shares, telling investors to be cautious about the stock’s perceived new upside.

The firm “certainly recognizes the optionality of remdesivir,” but Bank of America also noted that the drug offers “little lasting, meaningful profit and loss upside.”

Bank of America analysts said that the economics of addressing epidemics and pandemics are generally low, though in a best-case scenario Gilead could receive a one-time revenue boost of about $2.5 billion.

However, that total is a drop in the bucket compared with the roughly $12 billion increase in the stock's market cap since the start of February.

Remdesivir is an investigational antiviral that hasn't yet been approved anywhere globally for any use.

Working with health authorities in China, Gilead Sciences has initiated two clinical trials of coronavirus.

One of the studies is evaluating remdesivir in patients with confirmed disease who have developed more severe clinical complications like a requirement for supplemental oxygen. The other study is evaluating the drug in coronavirus patients who have been hospitalized but are not displaying significant manifestations of the disease.