In January of 1992 Gilead Sciences Inc.(NASDAQ:GILD) went public on the Nasdaq. Since its initial public offering of 5.75 million shares in which it raised $86.25 million, Gilead has grown to become a 110 billion dollar biotech powerhouse.

Investors that kept the faith from the IPO have been richly rewarded. A $10,000 investment made in 1992 would be worth more than 2.6 million dollars today, an approximately 26% compounded annual return.

Despite having the second highest net profit of any drug company in the world, the market has rewarded the company with a price-to-earnings multiple of just 7.07x earnings in a sector with an average p/e multiple of 23.87x earnings.

What message is the market sending with the current price of Gilead?

1. It values (grossly over-values) revenue growth above most factors in this sector

2. That it has little confidence in the mathematics of aggressive share buy-backs (or that it isn't paying attention)

3. That it doesn't have faith in management (it definitely should)

In the first 3 months of 2016, management purchased 8 billion dollars worth of Gilead common stock. The board of directors also authorized an additional 12 billion dollar share purchase plan for 2016. A 110 billion dollar market cap company buying back almost 8 percent of its shares in one quarter is extremely aggressive for a company of that size.

It's a testament to the tremendous cash-flow of the company. It's also a very strong indication of the confidence that management has in the future profitability of its portfolio of drugs. Investors have misinterpreted a quarter-over-quarter decrease in revenue and profit as a signal that revenue will continue to decline. Importantly, management has continued to offer guidance of 32 billion in revenue for 2016. Simple math dictates that if revenue of 7,794,000,000 were to continue (or decrease) in the next three quarters of 2016, that the total number would add up to less than the 32 billion in 2016 revenue that management has reaffirmed in its guidance.

When a company with 8,000 employees makes as much money as Johnson and Johnson (NYSE:JNJ) which employs 127,000 employees and has been in existence since 1885, it stands to reason to ask why the better capitalized company is rewarded with a higher market cap for earnings that it could and arguably should have had for itself. That isn't to say that the incremental earnings of a company like Johnson and Johnson shouldn't have the market value that they do. J and J has its purpose on the highway. It is steady,smart, and relatively conservative, like say a Toyota Camary.

The sky is the limit for Gilead if it continues to invest its earning with the same state of mind that it has in the past. For just 7.06 earnings you can buy a company that has returned 26% per year compounded for the past 24 years straight.

To the best of my knowledge, there is not a company that exists with a higher amount of revenue per employee. And I am almost certain that there is no company in the world with a higher net profit per employee. I haven't been able to find one. I challenge you to find one.

Conclusion: Gilead deserves much more respect than it is getting. A fair valuation for the company is $180 per share. I have faith in management to quiet many doubters with increases in revenue soon.

Disclosure: I am/we are long GILD.

This analysis doesn't say much worthwhile. Can you give us some analysis on why it's so discounted? For example, where does their money come from (which product lines), and how secure are these product lines from new innovations or upcoming competitors?

You might focus on say, the Hepatitis C market, to give a little more insight into why Gilead is so discounted.

How do you write this crap but fail to actually discuss the business fundamentals?

Drug pipeline
Increased competition
Lawmakers wary of high drug prices

Where did you pull the $180 number from?

This was the best part for me

"For just 7.06 earnings you can buy a company that has returned 26% per year compounded for the past 24 years straight."

Obv. this means it must go on forever.

Well they have a new Hep C pill that is about to get FDA and EU approval that treats all six genotypes of HEP C, called epclusa https://www.zacks.com/stock/news/218...s-chmp-backing

Harvoni got chmp recommendation in the EU in September of 2014 and was approved by the EU for sale in November of 2014.

Epclusa is expected to be approved by the FDA on June 28th,2016. And they got CHMP recommendation in the EU on May 27th. So it seems like July approval would fit the timeline of how the last drug was approved.

Gilead has 90 percent market share for its HEP C drugs. They just got a favorable ruling in Washington state in the district court that says that Medicaid might be required to cover all hep C patients.

They also had 3 new HIV drugs approved in the last six months. The market for HEP C is 140 million people worldwide. They have Hep B drugs as well.

Epclusa is important for asian markets which they aren't really in at all. They are presently in only about 30 countries. The 28 countries of the EU,United States,Japan, and India. Types 1-4 Hep C are most common in those places. Types 5-6 are more common in the asian countries.

What I think happened was that they had huge boosts of revenue due to pent up demand and the revenue dropped in one quarter and everyone panicked. This quarter might be similiar to last quarter, but the quarter after that is going to be huge.

This is just a dumb fluff piece/thread.

Zero discussion of competitors bringing down the prices of Hep C drugs. Zero discussion of competitor's upcoming products.

Sovaldi and Harvoni account for well over half of their revenues and most of their profits. 12 weeks of Harvoni costs nearly $100,000. There are compelling competitors coming to market from the big players which are far cheaper, and more yet will come. If they are successful, this is going to hammer both revenue and profit margins.

I don't know whether they will be successful. But the fact that you don't even discuss this - the most relevant part of analyzing this company - in two long posts means that you are a total idiot/mere stock pumper.

TS a lot of people go out and read all about 'investing' that somehow doesn't involve actually looking at and understanding the underlying business. These people get absolute trashed by market sectors like pharma.

I am a owner of GILD the hopes is that they diversify into other areas.

I think I would prefer a company with low revenues per employee as it shows that are not gouging the public.

I can't get solid information either way on the viability of competitor products. Gilead just got a patent infringement judgement overturned that involved Merck that might have required them to pay royalty's.

I think the size of the market is expanding for them as they get a footing in different areas of the world. The market is pricing the stock as if revenue will never increase again. But even if revenue were to stay the same the stock is under-priced considering the level of buybacks.

If everything else remains the same buybacks will drop the P/E ratio to below 6x earnings after this quarter. It just doesn't make sense given how much money the company is making. That money has to go somewhere. That is why the management of the company is so important. I think it's the most important factor. In the hands of good management cash is worth a lot.

What's this "we" ish?

Are you part of a hedge fund or investor group? (a particularly stupid hedge fund with lots of Fannie and Freddie stock) Or is this just a stock promotion deal?

I've been long this POS since 2014...

i'm down like $150k...

I believe nobody is paying full price on harvoni, but it makes headline and people scream to the scandal, the alternative was a liver trasplant which cost way more than 100k.

now litteraly any company adding harvoni to their drug is able to cure hcv, guess what harvoni + water cures 98% of hcv cases.

i believe it's one of those situation when the market is clearly wrong, overestimating that revenue and income is going to shrink forever at an absurd level.

market is too short-sighted and the last quarter was bad, and it dropped from $100 to $83, totally nuts.

market wants an acquisition to boost pipeline, etc.. but they are way smarter to buyback their shares, at least it's accretive and they are increasing ROIC giving something to shareholder, unfortunally wall street is ******ed and they wants revenue growth, and growth is potentially infinite so potentially infinite income. (lol)

the problem is that the future is gray with the upcoming election, and who knows what clinton will do to those big pharma. this is were the opportunity arises and you should go long.

it's not really deep value at 83$, but I don't think this is going to be worth less than $77 for a long time, if the fundamentals remain the same. You can run any dcf you want, with terminal growth rate -1% this eps, discounting 12% it's worth no less than $77...

the growth story for the future is absent, in the sense that it earns $17B which is like in top5 of the s&p, behind AAPL; BRK, WFC; JPM; VZ, so, it's really not sustainable, not with this pipeline. and also, given the fact that it's a cure those eps are not recurring.

if everything is already priced in and discounted, the only way to go up, it's really trhough an acquisition, and I'm not sure what is ok to buy right now... perhaps VRX after they default.

long term debt is at 22B, which is high... I thought it was a smart idea to make more debt to increase the buyout, but apparently, market didnt' think it's wise.

right now, it's a good time and price to buy if you have 12-18months timeframe, it's quiet slightly above 80s, perhaps it go down further perhaps it starts ripping and you make your 10% within 1 month... i like to buy when nobody is watching and stock won't move... once it's too talked and too crowded, there is none left to buy because it's too good to be true. (like in 2014 when i jumped for the first time -.-)
if you buy this, be prepared to suffer... because it's really way worse than it may seem.

I'm long GILD at near $90. If we exclude the HCV franchise from the company, it's not cheap with just HIV but relatively comparable to other big pharma. So if I look at the company as HIV plus a legacy HCV business that may not deteriorate as fast as the bear case, then it is very compelling on a valuation basis.

I'm not a fan of the buybacks though. I'm not going to buy more investing shares but will buy the dip as a trade.

Biotech Stocks Moving Higher; Traders Attributing to Positive News Regarding Independent Payment Advisory Board

IBB is already ripping, not sure where this thing could go..

Under its Priority Review process, the FDA approves Gilead Sciences' (GILD +3.2%) once-daily fixed-dose combination of sofosbuvir (SOF), a nucleotide analog polymerase inhibitor, and velpatasvir (VEL), a pan-genotypic NS5A inhibitor, for the treatment of adults with chronic genotype 1-6 hepatitis C virus (HCV) infection with and without cirrhosis. It is also approved for use with ribavirin.

The single-tablet med will be marketed under the brand name Epclusa.

For comparison, top-seller Harvoni (ledipasvir and sofosbuvir) is indicated for the treatment of HCV genotypes 1,4,5 or 6.

http://seekingalpha.com/pr/16556824-...ancial-results

beat bottom line

miss 200m in top line (lol)

lower guidance 500m on 30B, due to higher R&D costs

negative growth is higher than expected

another 3 months of choppiness/agony are coming...

Probably more pain. What worries me the most is the increase in R&D and admin expenses. Martin Skhreli spent about an hour on it last night, see youtube. Already low so it can't go too much lower unless they stop buyback.

I'd initiate a position at $81, good risk/reward here, stop below $80, target $86 for the first tranche, and then pray it goes to $100...

just TA..

news keep coming good but of course the market ignores because those have minimal impact..

I would want more indication that it is actually turning. 81 seems premature to me. I would want a close above 82 and/or preferably 83ish (50 day ma) and even more preferably breaking through that downtrend line (85ish). And if you can close above that peak around 89 you can play to fill that gap up to around 97.

81 with an 80 stop just seems kinda random and well within typical market noise. This chart at this price tells me to stay away unless something more positive happens. Still in a downtrend.

trust me if i invest in it the company will go bankrupt, thats for dam ****ing sure

lol, got out be w this add, right when things seemed to turn out to be good, then clinton starts coming w this plotical stuff

watching closely the IBB, I like CELG, BIIB and AMGN more, depending on the magnitude of the pullback...

probably adding more today above $79.50...

something is going on after they issued $5B in debt...

bought at the open, closed at the close...

one time.

tomorrow let's see if the main position holds, I'm doubling up if no hike for the year, otherwise I think I'm going to trimm a bit if still too high and eventually buy on the pullback below $79(?) within a couple of days.

Down 6% on beat on revenue, beat on earnings

next year they are going to bring in $10B, currently down 6%, which gives a p/e of 9 on a gaap basis.

HIV is much bigger than HCV now.

Trump's a disaster for big pharma.

Something was going to get them eventually. Their whole business model only exists because of hilarious government granted monopolies.

It's also a commonly held misconception that they were responsible for medical advances. At best they took science generated by other people and applied it. At worst they took science generated by other people and patented it without even doing much on the application side.

Their business model has preyed on the US for years. **** 'em.