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Gilead Sciences Inc

12 September 2014 

Gilead Sciences has been the subject of conversation recently amongst analysts and CNBC anchors alike. Touted as a “Game Changer” in the Biotechnology, pharmaceuticals and health science space, delivering its revolutionary $1000/pill/day Sovaldi drug aimed at curing Hepatitis C to a potential 15 000 000 patients worldwide. Federal law makers have questioned the cost of the drug which costs up to $84 000 for a full 12 week course, which previously was expected to sell for around $36 000 from Pharmasset Inc., acquired by Gilead in 2012 for $11.2billion.

On the 8th of September an online article by Jonathan Rockoff reported that Gilead Sciences is finalizing deals with several generic pharmaceutical manufacturers in India to deliver the pill at lower prices in developing countries including India, Indonesia and Pakistan. Bloomberg reported on the above earlier in the month further stating that the licensing deal could be concluded as early as mid-September, rolling the drug out to over 80 countries and retailing it at $900 for 12 weeks of therapy.

Gilead Sciences has a one year low of $58.81 and a one year high of $110.64. The company has a market cap of $163.6 billion and a price-to-earnings ratio of 23.99. During the same quarter in the previous year, the company posted $0.50 earnings per share. The company’s revenue for the quarter was up 136.1% on a year-over-year basis. Analysts expect that Gilead Sciences will post $8.01 earnings per share for the current fiscal year. The biopharmaceutical company has been the subject of a number of recent research reports. Analysts at RBC Capital raised their price target on shares of Gilead Sciences from $102.00 to $115.00 in a research note on Friday, August 22nd.

They now have an “outperform” rating on the stock. Separately, analysts at Cowen and Company raised their price target on shares of Gilead Sciences from $95.00 to $105.00 in a research note on Friday, August 15th. They now have an “outperform” rating on the stock. One investment analyst has rated the stock with a hold rating and twenty-one have given a buy rating to the company. The stock presently has an average rating of “Buy” and a consensus price target of $105.55. Stephan Byrd, Ticket Report 10/09/2014 

More on Gilead on Market Insight (as below)

Gilead Sciences Inc, 12/09/2014

Gilead Sciences Inc, 12/09/2014

Technical analysis

The sell-off in the stock on 5th September may have largely been due to the general profit taking in the biotechnology sector on the back of weaker August jobs numbers out of the USA, evident in the snap back in price and resumption of the upward trend. Biotech stocks have led the way recently and Gilead has been one of the star performers. Alternatively the company has also been labelled “The riskiest $100+ billion business in the world”, sighting its reliance on its one new drug Sovaldi as a major risk. 

Technically the stock has run very hard in the last year and long traders may still see it as overbought. Volume has increased of late, with macro-economic data out of the US, subsequent profit taking in biotech stocks and the news of the Sovaldi generic drug rolling out in developing markets. Long traders may look for better value in buying off support at 10500c on a potential retracement, alternatively a break above 10800c with an increase in volume may provide an opportunity for more conservative traders to get in. The bias is still to the upside with the share price trading firmly above its 50day and 200day moving average. Alternatively there may be some concern that there is head and shoulders or triple top forming on the price, indicating a potential reversal in price. - Leigh Riley, Premium Client Manager

Gilead Sciences Inc, 11/09/2014

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