| Stock (Symbol) | Stock Price | |
Gilead Sciences (GILD) |
$102 |
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| Data is as of | Expected to Report | Sector |
November 20, 2014 |
Feb 02 – Feb 06 |
Healthcare |
| Sharek’s Take | ||
 Gilead Sciences has two areas of growth opportunity: HIV/Aids & hepatitis. Unfortunately, its hepatitis drugs do too good a job curing patients. Gilead’s blockbuster Sovaldi can cure 90% of Hep C patients – most in a few weeks – at a total cost of around $84,000 or $1000 per pill. And now an even better pill Havoni has been developed by the company, that combines Sovaldi with another drug to eliminate the need to take other drugs. Havoni was approved by the FDA October 10th, and doctors delayed some treatments to wait for the new drug, thus Sovaldi sales slipped last qtr. At 10x 2015 earnings estimates, GILD is a value stock in the hot Biotech area. I feel the stock should sell for 15x earnings and think this $102 stock has a Fair Value of $149. The risk is hepatitis patients getting cured and no longer requiring treatment, which would curtail profits. But GILD management has the ability to develop new drugs for future growth. |
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| One-Year Chart | ||
 This stock was rising when Sovaldi sales were coming in way above expectations. 2014 est have soared from $3.79 to $7.96 the past 4 qtrs. Still, I don’t think the stock went up enough compared to the profit spike. Nice Est. Long Term Growth Rate of 24%, way higher than the P/E of just 10. |
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| Earnings Table | ||
 Sales soared 117% last quarter, boosting profits by 254%. Still, this didn’t impress investors.GILD only beat the street by 2 cents, but would have beat by more had doctors not delayed treatments. Annual Profit Estimates increased, but not to the degree of past quarters. Quarterly estimates are a bit erratic, due to tough comparisons in the 3QtrOut estimate. Still, good profit growth is set to continue into 2015. |
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| Fair Value | ||
 In the last three qtrs I’ve dropped my Fair Value P/E from 25 to 20 and now 15. Maybe next qtr I’ll drop it to 12. The stock is so cheap, but look at the 2009-2013 period when profits were off their highs. Maybe investors feel there’s another period like that coming? |
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| Ten-Year Chart | ||
 There was a long period where the stock didn’t go anywhere. This isn’t my type of ten-year chart. There’s good growth, then no growth, and now good growth again. The company going through stages. If profit growth starts to slow I might sell this stock. |
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| Power Ranking | Bottom Line | |
Growth Portfolio
8 of 22 |
Gilead is profiting handsomely from its hepatitis drugs, but curing people is taking from the pool of available patients, and thus hampering the stock. Still, at 10x earnings GILD gives investors huge upside in 2015 as I think Healthcare stocks will be the place to be. GILD is ranked 8th of 22 stocks in the Growth Portfolio Power Rankings. It is 6th of 12 stocks in the Aggressive Growth Portfolio Power Rankings. |
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Aggressive Growth Portfolio
6 of 12 |
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