Gilead Sciences Inc. (NASDAQ: GILD) recently reported earnings and they were, generally speaking, favorable. Consensus estimates were beat on both the top and bottom line due to a strong sales performance by the company’s flagship hepatitis C drugs, Sovaldi and Harvoni. However, Gilead has been under pressure by competitors to either reduce its price or find a better distribution strategy. As a result Credit Suisse has weighed in on Gilead’s position.

Credit Suisse downgraded Gilead to Neutral and lowered its price target to $115 from $130. This downgrade came on strong hepatitis C vaccine (HCV) headwinds and also resulted in lower estimates for earnings per share (EPS).

The new target price is based on a multiplier of 13.8 times 2016 EPS projections of $8.31. This is roughly a 10% discount from the 2016 S&P 500 price-to-earnings (P/E) multiple. Credit Suisse has estimates, in terms of the compound annual growth rate, for 2015 through 2018 as -7% in revenues and -8% in EPS.

Credit Suisse analyst Ravi Mehrotra said in the report:

We estimate Gilead market share of HCV will move from 80% in 2015 to 60% by 2019. Our new (previous) Gilead HCV franchise revenue estimates are $12.0 billion ($13.4 billion), $11.7 billion ($15.0 billion), $11.1 billion ($13.6 billion) and $10.2 billion ($14.1 billion) in 2015 to 2018. We note our Gilead HCV revenues are notably lower than current consensus numbers, which we believe will come down over the next few weeks.

The brokerage firm said that a downgrade does not necessarily mean to sell or that there is no upside. In fact Gilead’s new price target still implies roughly a 15% upside, not considering the new dividend that will be paid going forward.

Shares of Gilead were flat at $99.82. The stock has a consensus analyst price target of $120.13 and a 52-week trading range of $63.50 to $116.83.

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