| Stock (Symbol) | Stock Price | |
Gilead Sciences (GILD) |
$104 |
|
| Data is as of | Expected to Report | Sector |
February 18, 2015 |
Apr 20 – Apr 24 |
Healthcare |
| Sharek’s Take | ||
 Gilead Sciences is more of a value stock than a growth stock at this point. The company’s latest blockbuster Sovaldi has been on the market a year now and comparisons will get tougher 2 qtrs from now when 0% profit growth is expected on a 7% increase in sales. Growth is then expected to pop back up for a qtr before subsiding again, and in 2016 revenue growth is only expected to be 5%. Management is doing a good job trying to prop up the stock with a new dividend and stock buyback program that should reduce the share count by 10%. But what GILD really needs is another drug or two to boost sales, or we could see a repeat of the 2008-2013 period where profit growth was meh. The good news is GILD is a biotech stock and the sector is hot right now, so with cash coming into the sector I think the stock will rise, but I’m not a big fan as I want to see more growth. I’ll sit with GILD for now but may sell it if it rallies. |
||
| One-Year Chart | ||
 Investors started to anticipate the 2014 earnings surge in mid-2012 and pushed GILD higher, then the stock another bump up in early 2014 when Solvaldi started beating expectations. But for the last 6 months GILD hasn’t gone anywhere even as profit growth has surged. The Est. LTG of 25% is great but we have to hope GILD researchers will develop new drugs. |
||
| Earnings Table | ||
 Profit growth was 342% on a 134% increase in sales, but this didn’t seem to matter.GILD beat the street by 18 cents and that too didn’t matter much. Annual Profit Estimates declined, snapping a string of increases. Not good. Quarterly estimates show slowing growth after next qtr, with a bump in profitability 3QtrsOut that we shouldn’t get excited about as it’s more like a weekend beer belly bump than a baby bump. |
||
| Fair Value | ||
 During the past 4 qtrs I’ve dropped my Fair Value P/E from 25, 20, 15 and now 13. GILD is now selling for 11x earnings which is on the low-end of what it usually sells for. |
||
| Ten-Year Chart | ||
 I’m worried about a repeat of the 2008-2012 period. I don’t want to sit on dead money while the company develops another drug. |
||
| Power Ranking | Bottom Line | |
Growth Portfolio
24 of 24 |
Gilead is moving from being a growth stock to a value stock and I’m not real pleased about it. I see growth slowing and think the best case scenario now would be for the stock to rise 20% so I can sell it. The Biotech sector is hot so money is flowing to the sector, and that could help my wish come true. GILD is ranked 24th of 24 stocks in the Growth Portfolio Power Rankings, and its a stock I could sell if I find something I like better. I already sold the stock from Aggressive Growth Portfolio. |
|
Aggressive Growth Portfolio
N/A |
||
