Is Gilead Sciences a buy?

It's time to break down another biotechnology name! Here is the breakdown on $GILD, otherwise known as Gilead Sciences.


Current Price: $58.25

52/Wk High: $85.97

52/Wk Low: $58.06


Market Cap: $73.6 billion


Dividend: $0.68 / Yield of 4.53%


Read below for the breakdown!


Gilead Sciences is a major biotechnology company that develops and commercializes major medicines. Core focuses for the company consist of HIV, viruses, inflammation, and cancer treatments.


Throughout the year Gilead Sciences has gone from a powerhouse within the healthcare space to a laggard, failing to find another blockbuster drug.


In 2015 Gilead netted $32.6 billion in sales, but just a few short years later only netted $22.5 billion in sales last year. This slowed down due to the consistent descent in sales of Gilead's last blockbuster HIV and Hepatitis C drugs.


Due to slowing sales of past blockbusters, Gilead has been attempting for the last several years to find its next big hit.


Starting with Pharmasset, Gilead acquired the company in 2011 for $11 billion and so far the deal has been a home run for the company due to Pharmasset’s blockbuster drug Sovaldi, a drug typically used for Hepatitis C.


Then, in 2017 Gilead acquired Kite Pharma for $11.9 billion, but so far the acquisition has failed to produce anything significant.


Finally, Gildead recently acquired Immunomedics for $21 billion. The deal gives Gilead access to Immunomedics flagship drug Trodelvy which is expected to produce $750 million in sales in 2023 and $4 billion in sales at its peak.


Not only has Gilead been busy on the acquisition side, but the company currently has 42 clinical stage programs, presenting huge future opportunities.


Digging into the numbers, Gilead's last reported quarter was strong, delivering a Q3 beat. Gilead beat on EPS, reporting an EPS of $2.11 versus the expected $1.90. Furthermore, revenues continued to grow, coming in at $6.6 billion for Q3, up 17% year over year.


Product sales also increased in Q3 to $6.5 billion representing solid year over year growth of 18%.


When it comes to guidance, management expects Q4 to see continued growth and sees full year 2020 product sales landing within a range of $23 billion to $23.5 billion.


Taking a look at the balance sheet, the numbers could be better;


Total Debt: $24.102 billion


Total Liabilities: $37.907 billion


Total Assets: $55.934 billion


Cash & Short Term Inv: $18.914 billion


Although Gilead’s balance sheet is solid, decreasing cash positions are a worry going into the future.


On the valuation side of things, Gilead has continued to trend down and it looks to be fairly priced given the price to sales ratio of 3.39 times and price to book value of 4.17 times.


As for profitability, Gildeads’s Gross Margin is great, sitting at 78.57% but the companies Net Profit Margin of -1.29% is disappointing.


While the numbers are mixed, the analysts are very bullish. Currently, the mean price target is $78.29/share, representing a 33.33% gain.


Secondly, the high price target is $105.00/share, representing a whopping 78.81% gain, while the low price target sits at $61.00/share, representing a 3.88% gain.


The big money is just as bullish as the analysts, with 79.71% of Gilead being owned by institutions. Top holders include Capital Research Global Investors, The Vanguard Group, and BlackRock Institutional Trust.


The technicals on the other hand have been quite bearish, but could be flashing opportunity. According to the six-month charts, the MACD is running with downward momentum, within a range of -1.086 down to -1.3786.


Additionally, the six-month RSI sits at a low 25.92 along with a CCI of -187.2705. It is also important to note that Gildead stock currently trades roughly 27 points off its highs.


Overall, Gilead is a solid long term multiyear play, as it is likely that the company will soon find its next huge blockbuster.


On the other hand, without a new blockbuster drug Gilead faces some major risk and any investors must consider that, both short and long term.


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Disclaimer: This is not direct financial advice, simply opinion based on independent research.