NEW YORK (TheStreet) -- After plunging 14% on Monday on the news of increased competition for its hepatitis C treatment, shares of Gilead Sciences (GILD) continue to decline on Tuesday, down nearly 5%. This is a "really big decline," said TheStreet's Jim Cramer, co-manager of the Action Alerts PLUS portfolio.
While analysts at Bernstein defended the company and its promising future, analysts at Deutsche Bank lowered their price target from $142 to $125, Cramer said on Tuesday CNBC's "Mad Dash" segment.
He explained that because the stock has performed so well this year, up 44% before the recent drop, there is more room to the downside. Because Express Scripts (ESRX) said it will only cover AbbVie's (ABBV) hepatitis C drug, which is cheaper, the two drug makers are now engaged in a price war.
AbbVie, an Action Alerts PLUS holding, is a "fine" company, Cramer said. But this price war will hurt margins for both AbbVie and Gilead.
When Gilead's earnings multiple continued to shrink in 2014, that was the sign that something may have been wrong, Cramer added.
With Express Scripts taking back some control in regards to pricing, it may start doing so with other leading treatments from drug makers. This is a great thing for companies like UnitedHealth Group (UNH) , he said.
As for Gilead, the stock looks as if it can continue to head lower. Investors should wait for a better buying opportunity, Cramer concluded.