Quote:
Originally Posted by donfairplay
This sounds like a puff piece from a hedge fund that doesn't like its position being down 15% from when you last posted about GILD, and can't quite explain how "the market" is wrong (implying that you are right).
also, lol, no GILD is not worth twice what it is valued at now (plus you didn't give a time frame on that considering how wrong you were last time)
The market cap today is the same as it was in 2013. Yet it has retained earnings from 2014,2015, and 2016 that it did not have in 2013. That is the reason it is able to have 32.6 billion dollars in cash and investments on its balance sheet right now. It is also the reason it was able to purchase 123 million shares of its stock back in 2016(11 billion dollars spent). Its revenue today is 3x what it was in 2013. And its earnings per share are 5.5x times what they were in 2013.
No one can say the price of anything is "wrong" in an absolute sense. If you have not eaten in awhile a meal might be more valuable to you than a house. But given normal conditions a house is interpreted by most people to be more valuable than a meal.
Johnson and Johnson is worth 350 billion and Gilead is worth 90 billion. In 2016 Gilead earned 13.5 billion and Johnson and Johnson earned 16.5 billion. So for an extra 3 billion in earnings the market is willing to pay 260 billion more for Johnson and Johnson. The market says it wants growth companies but ignores that Gilead only has 9000 employees. Johnson and Johnson has to pay 126,000 people before shareholder's get theirs. Gilead has proven that it is more efficient at earning money than the large drug companies both on a basis of talent and on a cost basis. What I mean is that for every dollar in revenue that Gilead earns shareholders earn much more than they would if the Johnson and Johnson earned that same dollar. Gilead has better margins and a much lower cost structure. They are going to invest that 32.6 billion more intelligently than other companies invest their earnings. History has proven that. And eventually "the market" will figure it out. By then the stock will be 220 dollars a share and valued correctly. That's when CNBC will encourage the public to buy. Always a day late and a dollar short.