On Friday, Barclays analyst Geoff Meacham veered from his typical approach of addressing clients and chose to speak directly to management at Gilead Sciences, Inc. GILD 0.29%. Meacham chose to structure his latest research note on the pharma giant as a letter to the company, which included five recommendations for ways the company could potentially boost its market valuation.
According to Meacham, market sentiment toward Gilead seems to be at a low point recently.
“The purpose of this letter isn’t to single out your company as one that has been mismanaged (it hasn’t); rather, it is to provide context for the current valuation and with five concluding recommendations, help carve a roadmap to a re-rating,” Meacham explained.
Barclays believes Gilead management can be proactive by taking the following five steps:
- Consider transformational M&A deals outside of the company’s core businesses.
- Consider cutting costs in the hepatitis C business if the market continues to decline.
- Give more clarity on the potential impact of the HIV franchise by providing guidance.
- Consider taking a more aggressive approach to in-licensing/business development.
- Consider shifting focus away from capital return and more toward reinvesting in the business via M&A and other potential growth measures.
Like most pharma stocks, Gilead has had a rough go of it in the past year, with shares now down 21.9 percent.
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