Gilead Could Be Better off Splitting Drug Businesses -- RBC Capital

Analysts with RBC Capital say Gilead shares could climb as much as 40% if the company were to divide.

Author:: James Passeri
Publish date:: Aug 12, 2016 3:58 PM EDT

A note Thursday from RBC Capital on Gilead (GLD) - Get Report , which some are calling a "trial balloon," got a lot of chatter and -- judging by the pickup in some call-option purchases -- the chatter may not be idle. The research note suggested the drugmaker would be better off cutting its businesses right down the middle, adding that shares are likely to jump by as much as about 40% if management makes the cut. The analysts said there is 'trapped value' in Gilead's current combination of hepatitis C virus (HCV) and human immunodeficiency virus (HIV) treatments, with the HCV businesses less transparent, against mounting competition. The treatments are facing an environment of price erosion and eurozone uncertainties, they added. Gilead shares are down sharply on the year.

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