We came across a bullish thesis on Gilead Sciences, Inc. (NASDAQ:GILD) on Substack by Magnus Ofstad. In this article, we will summarize the bulls’ thesis on GILD. Gilead Sciences, Inc. (NASDAQ:GILD)'s share was trading at $91.41 as of Jan 3^rd. GILD’s forward P/E was 12.11 according to Yahoo Finance.

Gilead Sciences (NASDAQ:GILD) is positioned for significant growth, driven by its breakthrough HIV prevention drug, Lenacapavir, and advancements in its hepatitis and oncology portfolios. Lenacapavir, a groundbreaking biannual injectable, acts like a "super glue" that disrupts HIV's ability to infect cells, demonstrating unprecedented efficacy. With FDA approval expected this year and global approvals likely to follow, the drug is projected to generate peak annual sales of $3 to $4 billion, far surpassing GILD’s current HIV prevention drug, Descovy, which brings in $2 billion annually. Lenacapavir's market dominance is bolstered by the absence of competitors with comparable efficacy, positioning it as a transformative force in HIV prevention, especially given its 100% success rate in trials for cisgender women.

In hepatitis treatments, GILD remains a leader, generating $2 billion annually from its drug portfolio. While the segment's revenue significance has diminished over time, the company continues to innovate. Last year’s acquisition of Cymabay brought Seladalpar, now Livdelzi, into GILD’s pipeline. This novel therapy for primary biliary cholangitis (PBC), a condition that causes progressive liver scarring, is anticipated to deliver $700 million in peak annual sales, outpacing current market options. GILD’s ongoing research into antiviral therapies to mitigate liver cancer risks further solidifies its reputation as a pioneer in liver health.

In oncology, GILD’s progress has been steady but lacks the transformative impact seen in other segments. Oncology sales grow at an annual rate of 6%, yet cell therapies have plateaued. Acquisitions like Kite and Immunomedics have yielded satisfactory results, but to accelerate growth, GILD may need to pursue additional strategic takeovers. Management has set an ambitious goal of having oncology therapies account for one-third of revenues by 2030, emphasizing the segment's importance in its growth strategy.

GILD’s overall trajectory is bolstered by its pipeline strength and raised revenue growth guidance for 2024, now projected at 4% compared to 1% earlier in the year. Analysts’ price targets have adjusted to reflect this momentum, ranging from $95 to $105, with a fair value estimate of $115. Despite slow progress in oncology, GILD’s leadership is expected to achieve its ambitious targets, underpinned by Lenacapavir's potential and ongoing innovation in liver and oncology therapies. This outlook positions GILD as a compelling investment with substantial upside potential.

Gilead Sciences, Inc. (NASDAQ:GILD) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 59 hedge fund portfolios held GILD at the end of the third quarter which was 62 in the previous quarter. While we acknowledge the risk and potential of GILD as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than GILD but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article was originally published at Insider Monkey.