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In June the share price of Gilead Sciences hit a record high. The stock is now making a fresh attempt at its all-time highs, with its two treatments for hepatitis C acting as the catalysts behind the move. As I previously stated, Gilead Sciences was tipped to benefit greatly from its second hepatitis C drug Sovaldi, and the drug is proving itself to be the company’s meal ticket.
The revenue and earnings per share for the first three months of the year hammered analyst estimates. The drug maker subsequently increased its full-year sales forecast from $26-$27 billion to $28-$29 billion.
The firm is doing well from its HIV related treatments, but hepatitis C drugs are its big earners, from which revenue rose by 52% to $4.55 billion. That figure compares with analysts’ expectations of $3.54 billion. There was some concern that AbbVie’s Viekira Pak would be a serious competitor, but sales of Gilead Sciences’ more established drug, Harvoni, are still well ahead.
The pharmaceutical sector has seen a lot of M&A activity over the past year, and Gilead Sciences might be going on the acquisition trail. Some analysts are beginning to speculate as to what the company will do with its massive influx of cash. The company will have learnt from Pfizer’s mistake, and either buy out a rival or else plough it into R&D – because simply sitting on funds is a sure fire way to get left behind.
When Gilead Sciences announce its second-quarter numbers, the market is expecting revenue of $7.59 billion and EPS of $2.69. The first-quarter numbers easily exceeded estimates, and the revenue was $7.59 billion with EPS of $2.94, and the market was anticipating $6.8 billion and $2.32 respectively. Gilead Sciences will announce its full-year numbers in February 2016, and the market is expecting revenue of $30.1 billion and EPS of $10.82. These forecasts represent a 20% rise in both revenue and EPS.
Equity analysts are very bullish on Gilead Sciences, and out of the 27 recommendations, 22 are buys, four are holds, and one is a sell. The average target price is $125.68, which is 6.3% above the current price. Investment banks are also bullish on Pfizer, and out of the 24 ratings, 15 are buys, seven are holds, and two are sells. The average target price is $38, which is 8.1% above the current price.
The number of short positions being taken out on Gilead Sciences are at their lowest in one year. The short interest has dropped by 56% since the first-quarter numbers were revealed.
The share price is in a solid upward trend, and $120 is the initial target. A move through this level will bring the record-high of $123.35 into sight. Any moves lower will find support in the $114 area, and if that mark is taken out $110 will act as support.