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Gilead Sciences Inc. (NASDAQ:GILD)

RBC Capital Markets

Michael Yee

Price target

Market outperform



Yee raised his target to $56 from $48 after identifying areas of potential tax savings from the company's acquisition of Pharmasset Inc. that other analysts may not account for in their models. He thinks Gilead could domicile Pharmasset's PSI-7977 IP in Ireland, where it has a subsidiary, reducing tax liability on sales of the product to about 15% vs. 25-30% tax rates in other analyst models. PSI-7977, a single isomer form of PSI-7851, a nucleotide analog HCV NS5B polymerase inhibitor, is in Phase III testing to treat HCV.

Illumina Inc. (NASDAQ:ILMN)


Zarak Khurshid

Price target

Market outperform



Khurshid raised his target to $50 from $35 after Roche (SIX:ROG; OCTQX:RHHBY) made an unsolicited offer to acquire Illumina for $44.50 per share, or about $5.7B in cash (see Cover Story). Khurshid thinks the price was "a bit low" given the sequencing and microarray company's "recent progress, stabilized operations and continued technical leadership in sequencing". He expects Roche will end up "sweetening the deal." Earlier this month, Illumina said 4Q11 revenue and pro forma EPS would be about $250M and $0.34, respectively. Khurshid said consensus estimates at the time were $247M and $0.26.