With so much of the focus on Gilead Sciences’ (GILD) Hepatitis-C franchise, UBS analyst Matthew Roden and team wonder if its pipeline of drugs is “under-appreciated” following a call with the biotech giant’s head of research & development. They explain:
Trading at 10.5x 2015e EPS, we think Gilead’s stock reflects significant HCV tail risks and minimal credit for pipeline and capital allocation. The rigorousness in R&D was evident in our call, suggesting pipeline optionality ranging from antivirals to fibrosis, solid tumors, and cardiovascular. We also think market is starting to underestimate Gilead’s commercial prowess despite an overall HCV package that is first and best in class.
Shares of Gilead Science have fallen 0.4% to $101.66 at 10:01 a.m. today, even as the iShares Nasdaq Biotechnology ETF (IBB) has advanced 1.2% to $291.55.
I first invested in GILD in 2006. I cannot tell you how much money I've made but gild is by far my most profitable holding. I added and reduced shares over time but will always keep a core holding. It's a fantastic company with a great management team.
Citation from Barons:"
Gilead Sciences: Another Big Jump in Hep-C Prescriptions
Another Friday, another set of prescription data on Gilead Sciences’ (GILD) Hepatitis C drugs Sovaldi and Harvoni.
ISI Evercore’s Mark Schoenebaum notes that prescriptions for Harvoni rose 79% to 1,983, while Sovaldi rose 5% to 4,302. Together, the two drugs rose 20% to 6,286 prescriptions.
Schoenebaum says that prescriptions need to average 7,900 during the fourth quarter to meet consensus estimates–and he thinks Gilead will get there. “If you assume growth slows every week into quarter’s end from 20%, you get to consensus estimates,” he says.
Bernstein’s Geoffrey Porges and Wen Shi take the long view on Gilead:
We believe that Gilead Sciences will be one of the more remarkable growth stories in industry history from 2013 until 2017, with one of the fastest launches in industry history emerging from its Hepatitis C franchise. This launch adds to a steadily growing HIV franchise which offers relatively predictable 8-10% growth through 2017. In addition the company has an emerging oncology franchise which will be led by idelalisib which was just approved for B cell malignancies. We now forecast that earnings will grow explosively, from $1.95 in 2012 to more than $13 in 2016 and 2017, which should capture the attention and imagination of most active growth investors. We remain concerned that 2018 will see a significant decline in revenue, cash flow and earnings; TAF is turning into one of the company’s most valuable tools to mitigate that decline, but we still believe that the company will need to identify additional blockbuster opportunities to even maintain stable revenue, earnings and cash flow after 2017. Nevertheless even our most conservative valuation methodologies suggest that the stock is worth $120-130/share and with more aggressive methods even more upside can be justified."