Gilead Sciences (GILD) is a healthcare and biopharmaceuticals firm that researches, develops, and sells medicines that cater to people with hepatitis B and C infections, HIV/AIDS, respiratory conditions. GILD operates in many regions around the world, including North America, Asia, and Europe. The headquarters are located in Foster City, California, USA.
Lately, Gilead Sciences has found success in developing Sovaldi, an expensive but effective medicine, in pill form that treats hepatitis C. The company has recently been a topic of heated debate among investors looking to grow their portfolios through adding the company’s stock which trades on the NASDAQ.
Sovaldi: A Key for GILD
However, many investors see GILD’s price as not very attractive anymore, considering how it has outgrew the market since 2012. The $1,000 price tag per pill is also starting to shun away many prospect investors, as worries start to mount on whether or not Sovaldi is cost effective for its $90,000 price tag for the complete treatment. There is also a lot of debate as to whether or not GILD should be aiming to sell complete Sovaldi treatments to India and Egypt for as low as $900, around 1% of the cost for the treatment plan in the US.
The anxiety rises from how GILD will be profiting if it is selling a product for so much less than what it is goes for in developed markets, and also how it will put up against the much cheaper Interferon, which is also used to treat Hepatitis C, with approximately 80% success rate, compared to Sovaldi’s 100% success rate.
Gilead’s vice president, Gregg Alton, has stated that when taking into account the cost of a cure, one should examine the medicine on a “cost-per-cure,” meaning how effective a medicine through timing the duration of the treatment, and on that basis, Sovaldi would cost $115,000, considerably less than other treatment programs.
Stock in Focus
Despite the negatives, according to Seeking Alpha’s Arie Goren, we can see that GILD’s stock has a PEG ratio of 0.43, one of the lowest among all S&P 500 company stocks. Meanwhile, new data from IMS Health reveals that prescriptions for Sovaldi amount to more than all other Hepatitis C treatments combined.
On another positive note, the European Medicines Agency gave Gilead the green light on two new Leukemia drugs. This not only improves Gilead’s prospects and outlook, but also calms the fears of many skeptic investors regarding Gilead’s promising future.
It is also worth noting that there is speculation that Intercept Pharmaceuticals (ICPT) may be bought out by Gilead Science (GILD) in the future. Per Charles Schwab, RBC analyst Michael J. Yee, GILD should seek to purchase ICPT during the pullbacks that are likely to take place. Acquisition of ICPT would fortify GILD in the industry and decrease the competition from others in the industry including, JNJ, BMY, and MRK. This is a reminder for those not yet excited investors to stay tuned.
Gilead Sciences (GILD) currently has a Zacks Rank #1 (Strong Buy), suggesting it is looking great from an earnings perspective as well. In fact, GILD recently surprised estimated EPS by 44.10%, crushing expectations.
Meanwhile, for the current year outlook, estimates have been soaring higher as of late. The Zacks Consensus Estimate has moved to $7.26 per share from the 30 days ago consensus estimate of $6.13 per share. Thanks to these revisions, GILD is now expected to see 278.30% growth from last year's results.
With all that being said, Gilead Sciences seems like a solid stock to invest in for the near term. Time will tell whether it will be selling its drugs not only in the US, but overseas as well, which could mean for great earnings, and positive surprises. Coupled with the prospect of purchasing ICPT and shoring up its drug pipeline, and we are looking at a very auspicious future for GILD stock.
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