The biopharmaceutical sector is expected to bounce back this year, and Gilead Sciences could be a key beneficiary, according to Bank of America. Analyst Geoff Meacham upgraded Gilead to Buy from Neutral. He raised his price target on the stock by $7 to $95, suggesting the stock will gain 28.5% from Thursday’s closing price. “GILD shares appear to be oversold in our view, particularly given 1) the restoration of sustained HIV franchise growth and 2) increasing contribution from [hematology-oncology] (11% of sales today; 17% in 2027) and 3) optionality in both the HIV and heme/onc pipelines,” Meacham wrote in a note Friday. Shares of California-based Gilead have fallen 13.9% so far this year. The stock was up 2.3% on Friday morning. Potential catalysts for the stock, Meacham said, include: stronger-than-expected sales of Biktarvy, an antiretroviral drug used to treat HIV/AIDS, and faster acceptance of Descovy for PrEP, or pre-exposure prophylaxis, which is a drug that is taken by people who are at risk of HIV infection. Longer sustainability of revenue from sales of HCV (chronic hepatitis C virus) products. Rapid launch of Kite Pharma, a subsidiary of Gilead, a company working on cell therapy to treat HIV infections and potentially cure cancer. The success of the oncology pipeline could prompt investors to place further value on these Gilead programs. Still, there is a potential risk that sales of Biktarvy and HIV drug Genvoya could decline due to competition. Other headwinds include the potential for larger- The analyst said the company has seen a larger-than-expected decline in HCV revenue and delayed or limited clinical success in its oncology pipeline. As we enter the second half of the year, Meacham expects biopharma to be in a better position thanks to increased deal activity and a mitigation of key regulatory risks. Biopharma stocks have lagged year to date due to the rotation into the technology sector, he noted. “Given the potential for broader interest in this sector, we are more optimistic about performance in the second half of 2023,” Meacham said. —CNBC’s Michael Bloom contributed to this report.

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