Shorts should thanks BIIB to let them have a good price to cover. If people are logical, they would sell BIIB and buy GILD. That should be the normal flight to quality. But they seem to have not done it en mass. That's why there is a market.
Your question should be revised by asking who is selling instead of who is buying. About 94% of this company is owned by institutions, they do not sell when a stock just broke out into a new uncharted area. I don't think the buy back program is the main reason for the rise from circa $100 to $122. If I don't already own too much (overweight), I would not hesitate to buy here at new highs when it broke $117.
Without the buy out offer, this should be close to or over $8 today. Switch some into SFUN this morning but avoiding LEJU, since it is also controlled by the same Chairman, as a protest to the low buy out offer. Bullish on Chinese real estate related companies.
Great result just reported, AH price per share at $136 now. Cash on hand = $3.6 Billion. Must be a lot of games players in China. I remember this stock stopped trading at 64 cents (split adjusted to today = 15 cents per share) for quite a long time. Anyone who invested $1000 and still holding it today is worth almost one million US dollars, yes it is not a mistake, this stock has multiplied 1000 times since those days. Congratulations to Longs.
@frey, people have to focus on Gross Margin after the discount. Still highest in the industry. My marginal analysis indicates cost of goods sold is only 2.7 cents for each dollar of marginal sales at Q1 discount. Non-GAAP Product Gross Margin guidance still maintained at 87% - 90% for the whole year's sales after the discount. Some people may wrongly believe that a 46% discount will mean lower gross margin, even close to 50%. Wrong. It was guided to be 87% to 90% in February and re-affirmed. Key is sales volume which they have out-performed and upgraded full year guidance.
@hat_trick is correct. Discounts are accrued and already expensed when accrued, therefore would not reduce earnings a second time when the cash is paid out later. Cash flow will be impacted but not earnings.
If anyone did marginal analysis, it is obvious that the additional sales of $2,534 Million vs. Q1 of 2014 required cost of 2.7 cents per every dollar of sales GAAP and 2.5 cents per dollar of sales non-GAAP. 46% discount from list is not a profit killer after all. Simplified example: sell at $1000 per pill, cost at $27 = marginal GM of 97.3%. Sell at $500 (50% discount), cost of $27 = marginal GM of 94.6%. In this simplified example, Gross Margin came down from 97.3% to 94.6% (a whopping reduction of 2.7% after giving 50% discount on the list price of $1000). Why can't analysts see this effect? Congratulations to all the LONGs and thanks a million to all GILD people, from worker to top management, for a job well done!