Why Gilead Sciences Stock Just Popped

Key Points

• Needham upgraded Gilead stock to buy today.

• The analyst sees billion-dollar potential in Gilead's Yeztugo drug for preventing HIV.

• Gilead stock looked cheap before the upgrade. It could be an even better value now.

• 10 stocks we like better than Gilead Sciences ›

Biopharmaceuticals stock Gilead Sciences (NASDAQ: GILD) jumped 2.5% through 12:30 p.m. ET Friday after Needham & Co. upgraded the shares to a buy rating and slapped a $133 price target on the $116 stock.

Key to the analyst's analysis is Gilead's new Yeztugo prescription medication for pre-exposure prevention of HIV-1.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

Image source: Getty Images.

What Needham says about Gilead

Citing a survey of physicians, Needham reports in a note covered on The Fly this morning that the market for "pre-exposure prophylaxis" against HIV is likely to increase 49% in size over the next five years. Within this market, physicians on average expect Yeztugo to grab a 38% market share.

But here's the thing: Most analyst forecasts do not factor into their Gilead valuations Yeztugo's share gains in the growing HIV prophylaxis market. And with Needham believing Yeztugo will become a "a multi-billion dollar contributor to sales growth over the next several years," the analyst feels investors should buy Gilead stock now, before more analysts catch on to the opportunity.

Is Gilead stock a sell?

Just how big of an opportunity is this? Well, consider Gilead as it stands today. Valued just over $141 billion, Gilead stock sells for just 23.5 times trailing earnings (i.e. without growth from Yeztugo).

Most analysts expect Gilead to grow profits nearly 23% annually over the next five years, and the company also pays a respectable 2.8% dividend yield. I'd argue that already makes Gilead stock a good stock prospect for growth at a reasonable price. But Gilead also generates substantially more free cash flow than it reports as net income -- about $9.8 billion over the last 12 months -- which drops its price-to-free-cash-flow ratio down well below 15.

Without Yeztugo, that's already a great price. With growth from Yeztugo, Gilead stock could be a steal.

Should you invest $1,000 in Gilead Sciences right now?

Before you buy stock in Gilead Sciences, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Gilead Sciences wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $636,774!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,064,942!*

Now, it’s worth noting Stock Advisor’s total average return is 1,040% — a market-crushing outperformance compared to 182% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of July 21, 2025

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Gilead Sciences. The Motley Fool has a disclosure policy.