Commenting on the news that Gilead Sciences (GILD) has named Daniel O’Day as chairman of its board and CEO, Cantor Fitzgerald analyst Alethia Young told investors that the move is a positive for Gilead as one of the biggest overhangs for the stock has been around who would be the next CEO. Meanwhile, her peer at Jefferies voiced a similar opinion, saying that the hiring of O’Day is a “positive incremental step.”
GILEAD APPOINTS NEW CEO: Gilead Sciences has announced that its board has named Daniel O'Day chairman of the board and CEO, effective March 1, 2019. O'Day is currently the CEO of Roche Pharmaceuticals (RHHBY). He has held the position since 2012, and prior to that led Roche Diagnostics. The Board has also appointed Gregg Alton as interim CEO for the period of January 1, 2019 until O'Day's start date of March 1, 2019. Alton has held a number of executive positions at Gilead over the past 20 years, with experience in legal, medical affairs, policy and commercial. He previously served as general counsel and in August of this year, was appointed Chief Patient Officer.
O’DAY APPOINTMENT A POSITIVE: Following the news, Cantor Fitzgerald’s Young told investors that she views the appointment of Daniel O'Day as a positive for Gilead Sciences. One of the biggest overhangs for Gilead has been around who would be the next CEO and what that might signal around the company's strategy, Young pointed out, adding that she would expect the market to view this appointment positively "since it gives clarity around one of the most important questions around building a Gilead thesis." The analyst also noted that the company is appointing a leader that will focus on product pipeline diversification and commercial growth, and would expect the new CEO to potentially be more aggressive around M&A strategy with Gilead’s significant amount of cash. She reiterated an Overweight rating and $88 price target on Gilead’s shares.
SHARES ‘MORE OWNABLE’: In a research note this morning, Jefferies analyst Michael Yee said he views the hiring of Daniel O'Day as a "positive incremental step," which helps make shares of Gilead Sciences "more ownable" since investors have long waited for some clarity on Gilead’s next priorities under new leadership. The hire will help transition current Gilead into the new Gilead for 2019-2021, including stabilizing legacy businesses, deploying the balance sheet, and entering new markets, Yee contended. While the analyst awaits future commentary from O'Day that elucidates his long-term vision for the company, Yee said he assumes his plan-of-action for 2019 is to ensure that HCV stabilizes and becomes more predictable, HIV grows as Biktarvy continues to reach record revenues, and Yescarta grows each quarter as the company continues to expand its presence in and solid tumors. The analyst reiterated a Buy rating and $95 price target on the shares.
PRICE ACTION: In morning trading, shares of Gilead Sciences have dropped about 1% to $67.58.
