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Gilead Sciences (GILD) Disclaimer: The analysis of this stock is for training purposes only and does not constitute financial advice.
www.sharenavigator.com Stock Name:
Gilead Sciences
Ticker Symbol:
Current Stock Price: $84.68
Target Price:
Upside potential:
Dividend Yield:
Stock Exchange:
Market Cap:
$114 billion
1. Business Summary:
Gilead Sciences discovers, develops, and commercializes proprietary treatments for viral diseases (specifically HIV/Aids, influenza, hepatitis B and C, leukemia, and Lymphoma). Drugs currently on the market include Sovaldi, Harvoni, Stribild (formerly known as the QUAD), Complera, AmBisome, Atripla, Truvada, Viread, Emtriva, Tamiflu, Vistide and Hepsera. 2. Financial & Investor Data:
Sales (Billions)
Earnings Per Share (EPS)
Dividends Per Share
Profit Margin
Long Term Debt (billions)
Average PE ratio
Disclaimer: The analysis of this stock is for training purposes only and does not constitute financial advice.
www.sharenavigator.com 3. Historical Financial Data Analysis (Last 6 years)
- Sales Growth: Excellent historical Sales Growth rising from $7.9 billion to
- Earnings per Share Growth: Excellent historical EPS growth rising from $1.66
per share to $11.91 per share. - Dividend Growth: Gilead has only in recent years paid out a dividend to
shareholders. As of 2016 Gilead has in excess of $16 billion in cash to distribute to shareholders. - Profit Margins: Evidence shows that the management team at Gilead are
doing an excellent job maintaining profit margins. - Long Term Debt: Gilead's Debt has risen substantially to $22 billion over the
past 6 years. Interestingly enough, GILD haven't used much of the cash that they have raised through debt issuance. It is widely expected that Gilead will use the debt raised to continue with their share repurchase program and make strategic acquisitions. - Average PE: Gilead normally trades at 11 -13 times earnings. Now it only
trades at 9 times earnings as future growth is set to slow. This maybe improved if and when Gilead acquire companies with strong drug pipelines. Disclaimer: The analysis of this stock is for training purposes only and does not constitute financial advice.
www.sharenavigator.com 4. Technical View
Gilead has traded between $82 and $123 over the past 52 weeks. Currently, the share price is trading at $84.68. The 200 day moving average is at circa $100. There is strong support at these levels from a Technical Perspective. However, a breach of $82 would suggest that Gilead shares may trade in the mid to high $70's. 5. Recent Earnings Report & other news
- Earnings April 29th
o Profits: Gilead reported lower than expected earnings of $3.03 per
share…below analyst estimates of $3.15 per share. This was up slightly from $1.90 in the same quarter in 2015. o Sales: Gilead reported lower than expected sales of $7.79 billion
below analyst estimates of $8.13 billion. This figure was up 2% on the same quarter last year. Disclaimer: The analysis of this stock is for training purposes only and does not constitute financial advice.
www.sharenavigator.com o Harvoni Sales: Hep C blockbuster drug sales down 15%. Mainly due to
insurers rebate programmes in the US. o Solvaldi Sales: Sales up 31% year over year
o Sales Guidance: Gilead maintained their guidance for 2016 of $30-$31
billion in sales - Share Repurchase Program: Gilead just completed a $15 billion share
repurchase program. They have now started buying back shares under a new $12 billion share repurchase program which was announced in January. - Acquisition: Gilead is on the hunt to acquire companies to add to its pipeline.
It has the cash to do it so we expect some activity in 2016. 6. Sales and Profit Outlook
Estimates for Gilead have been lowered since their recent earnings report. - Sales Forecasts: Sales for fiscal 2016 are set to fall to $31 billion from $32.6
billion in 2015. This represents a fall in sales of -4.9%. Sales growth is forecasted to be stagnant in 2017 (unless acquisitions add to the pipeline). - Earnings Per Share (EPS) Forecasts: The average earnings per share (EPS)
estimate for Fiscal 2016 is $12.08 up from $11.91 in 2015. This represents growth in profits of 1.4%. Estimates for Fiscal 2017 indicate a return to growth at $12.42 per share. Note, much of this growth will be due to their active share repurchase program unless Gilead add to their pipeline through - Share Price Outlook: Estimating the future share price is a difficult task.
Remember the basic share price formula: Share Price = Earnings Per Share * PE
We believe that the current share price represents good value for Gilead trading at only 7 times earnings. However, there is a reason for such a low multiple and that is because of growth concerns with Harvoni and the pipeline in general. Much of Gilead's earnings growth for this year and next will be due to financial engineering Disclaimer: The analysis of this stock is for training purposes only and does not constitute financial advice.
www.sharenavigator.com and share repurchasing. Therefore, until Gilead either acquire another company with complimentary pipelines or release new drugs from their own pipeline a lower multiple of earnings is warranted. We believe the market has over corrected here and we will apply an earnings multiple range of 8-10 times forecasted 2017 earnings. - Low Target Price = $12.42*8= $99.36 (possible 17% rise from current
- High Target Price = $12.42 * 10 = $124.20 (possible 47% rise from
current price levels) Please note, Gilead may trade lower than these target prices. After the next earnings report in July 2016 we will re-assess our target price for Gilead. Disclaimer: The analysis of this stock is for training purposes only and does not constitute financial advice.
www.sharenavigator.com 7. Risk Management
As with any stock investment, there are no guarantees. Circumstances and fundamental outlook can change for the better and also for the worse. A smart investor will allocate less than 5%-6% of their portfolio in this stock. For example, if we have €10K in our portfolio. We will invest no more than €500-€600 in this stock. We will start building a small position at around 3%-4% of the portfolio building it to 5% or 6% over a period of time. 8. Summary
Gilead has reached an impasse with growth. Concerns surrounding the growth of their blockbuster drug Harvoni are well founded based on the recent earnings report. Although earnings are due to grow at a very low rate for the next 2 years much of that is due to financial engineering or share repurchasing. Whilst this is positive for investors, weak top line growth and is a concern. Having said that Gilead has a substantial cash hoard and is actively looking to acquire new drug pipelines. We believe that the current multiple of earnings has priced in a lot of the negative outlook and that there may be upside from here. Although shares will remain under pressure in the short term we believe that in the medium to long term, Gilead will regain growth. We believe that any positive developments on the mergers and acquisition front will cause Gilead to trade at higher multiples of earnings. We see the recent negative sentiment surrounding Gilead and biotechnology companies in general as an opportunity to build a position. Disclaimer: The analysis of this stock is for training purposes only and does not constitute financial advice.
www.sharenavigator.com About Share Navigator

Based in Dublin City University (DCU) Share Navigator is an independent training company that specialize in stocks and options. Share Navigator believe in training people in a ‘Real World' environment via simulated trading accounts. This allows our members trade in a real world environment but without any financial risk. Each member of Share Navigator is given a personal simulated trading account. Everything is real except the capital. The objective of Share Navigator is to teach people how to invest and trade in a real world environment successfully before risking any of their own capital. Contact Information:  Ph: + 353 1 7007484
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Disclaimer: The analysis of this stock is for training purposes only and does not constitute financial advice.
www.sharenavigator.com Disclaimer
This report does not constitute financial advice. This report is to be used in the context of education and training in the stock market. The purpose of the report is to highlight the evaluation process when investigating a stock. Members of Share Navigator can then use their personal Simulated Trading Account to practice buying and selling shares. The value of investments may rise as well as fall. Past performance is not a guide to future performance. The risk of loss in trading securities, options, futures and forex can be substantial. You should consider all relevant risk factors, including your own personal financial situation, before trading or investing. Disclaimer: The analysis of this stock is for training purposes only and does not constitute financial advice.
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