Gilead Sciences, Inc. (NASDAQ: GILD)
Gilead Sciences is one of my favorite stocks to follow. In my opinion, the growth potential on the stock is incredibly massive; and lately, there’s been more and more good news popping up. Today, we’ll talk about some of the latest stories from GILD and why I think it’s such a strong investment option. So, let’s get right to it!
Gilead Sciences Price Target Was Recently Raised By Merrill Lynch
On Monday, Bank of America Merrill Lynch announced that analyst Ying Huang raided the firms target price for Gilead Sciences stock. The increase pushed the target up to $101 from $94. In the release, the analyst explained that the stock is currently trading at a steep discount as investors remain concerned about GILD’s ability to maintain control of the HCV treatment market.
GILD Gets Positive News From Japan
Another big piece of news that came out on Monday was an announcement from GILD that the Japanese Ministry of Health, Labour and Welfare has approved Harvoni as a once-daily single tablet regimen for the suppression of viremia in patients with genotype 1 chronic HCV infection with or without compensated cirrhosis, with a treatment duration of 12 weeks. This is big news for the company because, according to Gilead Sciences, Japan has one of the highest rates of liver cancer in any industrialized country, resulting primarily from HCV. Of the more than 1 million people suffering from chronic HCV in Japan, 70% to 60% of them have the genotype 1 strain of the virus. Therefore, approval in Japan will open the doors to an entirely new, and very big, stream of revenue.
Why I Believe Gilead Sciences Is A Great Long-Term Investment
First off, I’m incredibly happy that Ying Huang made it clear that this stock is trading at an incredible discount. As I’ve pointed out time and time again, Gilead Sciences has held a P/E ratio that’s under 10 for quite some time now. Given that the average P/E ratio in the industry is 16-17, this is an incredible discount. As a matter of fact, this insinuates a discount of over a third on the stock. That’s incredibly cheap. The reason for the discount is simple, investors fear that Abbvie will take a larger portion of the HCV treatment market; drilling GILD revenue down. Which leads me to the next point…
While GILD has seen a minor decline in prescriptions for Harvoni, the decline hasn’t nearly been as big as analysts expected to see. Also, with Japan’s approval of the drug coming on board, we can expect to see sales start to climb yet again. Therefore, I’m not sure that declines in the HCV franchise are likely to have a long-term negative affect on Gilead Sciences.
Finally, I’d like to point out that a company is only as strong as the team that guides it. When it comes to Gilead Sciences, that team is incredibly strong. They have proven that they have the ability to not only innovate great solutions for the healthcare industry, they are also able to ensure profits from their innovation. That’s not something that’s likely to end any time soon.
What Do You Think?
Where do you think GILD is headed and why? Let us know in the comments below!