Gilead Sciences Inc. (NASDAQ: GILD) saw its shares take a step back on Monday after an independent research firm downgraded the stock. Many investors have hoped that the shares will pull out of their holding pattern with some M&A, but this boost only proved temporary. As a result more analysts are taking a more sideline approach to this stock.

Argus downgraded Gilead to a Hold rating from Buy based on concerns about a steepening decline of the company’s hepatitis C products and flattening of HIV sales, which account for 68% of revenue. The combination of declining revenue and higher R&D to support development of CAR-T program (acquired in Kite Pharma deal) is expected to pressure the operating margin in 2018.

The independent research firm is also lowering its adjusted EPS estimates to $8.50 from $8.60 for 2017 and to $7.00 from $7.50 for 2018 based on its assessment of the company’s slower growth prospects for HIV and hepatitis C drugs.

In its report, Argus addressed the recent M&A:

Putting behind the euphoria of the Kite Pharma acquisition, we assess the growth drivers for the company in the context of continuing declines in Gilead’s antiviral drugs for HIV and hepatitis C. First of all, as promising and revolutionary is the CART gene-therapy regimen for treating certain blood cancers (acquired in the Kite deal), Gilead does not expect this acquisition to be earnings accretive for at least three years after the close in October 2017.

In terms of its declining sales, the slide in hepatitis C sales is due to fewer patient starts as the bulk of sicker patients have been treated. Sales of Epclusa, a pan-genotypic version of the hepatitis C drug, had a strong launch but its growth rate appears to have flattened out. Further, Epclusa faces competition in the pan-genotype space from AbbVie’s Mayvret, which was launched recently in the United States.

As for the HIV space, Gilead has brought to the market several newer drugs that have better safety profiles than older drugs. Still, Gilead’s total HIV sales declined 9% in the third quarter, falling from a +2% performance in the second quarter. Total hepatitis C sales fell 34%. As mentioned, HIV and hepatitis C together account for 68% of revenue.

Shares of Gilead were last seen down 1.5% at $72.64, with a consensus analyst price target of $84.90 and a 52-week range of $63.76 to $86.27.

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