Gilead Sciences: Profit-Taking Call Highlights Unproven Yeztugo Ramp Amid 43% Rally

What happened

Gilead Sciences' shares have rallied 43% over the past year, prompting a Seeking Alpha analyst to recommend taking profits due to valuation concerns. The article notes strong Q4 sales growth of 10.8% year-over-year for key drugs Biktarvy, Yeztugo, and Livdelzi, totaling $4.2 billion. However, it criticizes the oncology franchise's performance, echoing DeepValue's report which highlights ongoing competitive headwinds and guided declines in cell therapy revenue. DeepValue's analysis underscores that Gilead's investment thesis hinges on Yeztugo achieving an $800 million 2026 target, dependent on payer access and re-dosing persistence metrics that are not publicly disclosed. With CVS Caremark excluding Yeztugo from formularies and a lack of transparency on persistence, the recent stock appreciation may have outpaced the evidence supporting a blockbuster ramp.

Implication

The profit-taking call signals that market optimism may have overshot, given the unverified assumptions behind Yeztugo's growth trajectory. Oncology remains a significant drag, with guided declines in cell therapy revenue offsetting HIV strength and limiting consolidated earnings upside. Critical commercialization metrics, such as covered lives and second-dose rates, are absent from public disclosures, raising execution risk. DeepValue's WAIT rating and attractive entry point of $140 suggest better risk-reward opportunities may emerge if Yeztugo stumbles. Investors should monitor mid-2026 updates for concrete evidence on access and persistence before increasing exposure, as the stock's near-term performance is highly levered to Yeztugo's quarterly sales versus the $800 million target.

Thesis delta

The Seeking Alpha downgrade reinforces DeepValue's cautious stance, indicating that Gilead's 43% share price increase has not been matched by commensurate progress in de-risking Yeztugo's commercialization. No material change to the core thesis is needed, but the profit-taking recommendation highlights the elevated valuation risk after the rally, emphasizing the need for patience until key metrics are disclosed.