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Why Morgan Stanley likes Gilead’s HIV prevention play
Morgan Stanley met privately with Gilead Sciences (GILD) leadership at its 2026 Global Healthcare Conference this month, and the feedback strengthened the bank’s positive view on the stock.
Morgan Stanley’s biopharma team hosted a meeting and a management dinner with Gilead Chairman and CEO Daniel O’Day and Chief Commercial and Corporate Affairs Officer Johanna Mercier. According to a Morgan Stanley research note shared with me, the discussion reinforced its Overweight rating on Gilead and singled out one franchise as the biggest reason to stay positive.
Gilead trades around $150.89, up about 24% year to date and roughly 111% over five years. That kind of run in a biotech stock usually needs a catalyst, and Morgan Stanley points to HIV prevention. The bigger question for investors now is whether the new HIV prevention business built around Yeztugo can keep growing at the pace of the last few quarters.
What Morgan Stanley heard from Gilead’s leadership
Terence Flynn, a Morgan Stanley equity analyst who covers Gilead and other healthcare stocks has held an Overweight rating on the stock since January 2025.
According to the note, Gilead management described the company as being at “an important inflection point, supported by what it views as the most robust portfolio in the company’s history,” with no patent expiring until 2036.
That setup is rare, since most large-cap drugmakers usually spend time preparing for a patent cliff. A patent cliff is what happens when a top-selling drug loses its patent protection and cheaper copies flood the market, which reduces revenue.
Flynn’s price target uses a discounted cash flow model with a 10% weighted average cost of capital and a 3% terminal growth rate, based on the September 15 close of $146.30. The Overweight rating was already in place before the conference, so the note is a confirmation of the existing call.
Gilead earns most of its money from HIV medicines but also sells drugs for hepatitis, oncology, and liver disease. That mix supports cash flow while newer launches ramp up.
Yeztugo is the main reason for Morgan Stanley’s positive view
Yeztugo, the twice-yearly HIV prevention shot Gilead launched in 2025, is the main reason for the bank’s positive view. Yeztugo is a form of PrEP, or pre-exposure prophylaxis, which is a drug people take to prevent HIV infection before they are exposed.
Gilead’s management guided its first full year of Yeztugo sales at approximately $1 billion, with the total prevention portfolio running at about $4 billion annually. According to the note, Yeztugo is drawing “a healthy mix of patients switching from existing PrEP options and individuals entering the category for the first time.”
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Current PrEP users number roughly 550,000, more than double the 2022 level, while the CDC estimates about 2.2 million Americans could benefit, according to the Morgan Stanley note. That works out to about 25% penetration, and the overall market is growing 14% to 15% each year.
More than 70% of Yeztugo patients returned for their six-month reinjection, which means most patients stayed on the drug long enough to receive full-year protection.
Biktarvy still leads in HIV as new drugs move forward
Yeztugo is the main driver for Gilead’s HIV prevention and treatment business, but Morgan Stanley’s confidence also rests on the wider portfolio.
Biktarvy, Gilead’s flagship HIV treatment pill, still controls more than 50% of the global market and more than two-thirds of patients new to HIV therapy, according to the note. Gilead raised its HIV franchise growth guidance to 9% to 10% for the year, up from 8%. The company recently launched BIC+LEN, a daily oral option built for patients who currently take between five and ten pills a day.
Related: Key HIV stat over 70% leaves BofA siding with Gilead
Beyond HIV, the near-term catalyst that matters most is anito-cel, Gilead’s cell therapy for a type of blood cancer. Gilead’s management continues to describe its profile as “potentially best in disease,” according to the note.
The Food and Drug Administration has a decision due in December, and Gilead estimates the initial opportunity in advanced-stage patients at approximately $3.5 billion, with plans to move into newly diagnosed patients’ treatment next year.
Two more experimental drugs in immunology and inflammation have late-stage results expected before the end of the year.
The risks investors should watch
Morgan Stanley points to unexpected competition in HIV drugs, execution problems in the HIV pipeline, and the possibility that Kite’s CAR-T cell therapies fail to gain broader market penetration or expand into newly diagnosed patients. CAR-T is a cell therapy that reprograms a patient’s own immune cells to attack cancer.
The Washington policy situation adds another layer of uncertainty. Discussions around pharmacy benefit managers, the 340B drug pricing program, and insurers all touch the HIV franchise, and any of them could affect pricing over the next few years.
For investors who already own the stock, watch the anito-cel FDA decision in December, third- and fourth-quarter Yeztugo sales, and the immunology drug results before year-end.
For anyone who wants to start a new position, Gilead’s 2.17% dividend yield offers some income cushion while these catalysts play out. The stock’s 24% year-to-date rally suggests the easiest entry point has passed, so a gradual accumulation strategy may fit better than a single investment.
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This story was originally published by TheStreet on Sep 20, 2026, where it first appeared in the Investing section. Add TheStreet as a Preferred Source by clicking here.
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