Gilead Sciences, Inc. (NASDAQ: GILD)
Following last week’s positive earnings report, Gilead Sciences had a great couple of days in the market. However, the stock is down today and in a big way. While some may be looking at this as tremendously bad news, I see the exact opposite. In my opinion, GILD is doing nothing more than presenting investors with a great buying opportunity. Here’s why…
Why Is GILD Falling Today?
One of the first things we need to look at to figure out whether or not we’re seeing long term downtrends from GILD is to figure out why the stock is falling in the first place. If you’re looking for an asset specific reason, give up your search because you’re not going to find what you’re looking for. In all reality, we’re seeing a sea of red in the stock market today no matter what industry you’re looking at. This type of thing happens from here to there, but is not likely to last long.
There Are Plenty Of Reasons To Invest In Gilead Sciences
While you’ll be hard pressed to find bad news about GILD right now, it’s not hard to dig up a few reasons to invest in the company.
- Superiority In Hepatitis C – Hepatitis C revenue has been a big concern for investors since Abbvie Inc (NYSE: ABBV) decided that they wanted to take their piece of the pie. When ABBV teamed up with Express Scripts, things got even more concerning. However, the recent earnings report showed that ABBV hasn’t dipped into GILD’s profits and isn’t likely to do so as heavily as analysts expected moving forward either. After digging into it a bit myself and talking to two separate patients, one treated by ABBV and one treated by GILD, it was overwhelmingly clear to me that GILD provides the better option.
- Gross Margin Increase – In the last few earnings reports, we’ve seen a favorable gross margin increase from Gilead Sciences. This last earnings report was most important however because many investors had their doubts, but the company proved that they still had it!
- Compelling Valuation Metrics – Gilead Sciences is one of those undervalued stocks that is hard to find with great earnings growth along the way. Not to mention, at 0.52, it has one of the lowest PEG ratios in the S&P 500.
What We Can Expect Moving Forward
Moving forward, in both the short-term and long-term outlooks, I’m expecting to see great things from GILD…
- Short Term – As mentioned above, the market is in the dumps right now. Now matter what industry you look at, you’re seeing a sea of red! So, chances are that in the short term, we will see a market wide recovery; bringing gains for GILD investors.
- Long Term – In the long term, for me, the outlook is clear. While I do believe that ABBV will hinder growth for GILD in the hepatitis C market, I don’t think we’re going to see much backwards movement there. Also, considering that GILD maintains superiority in the HIV market and has a decent pipeline of prospects, it’s easy to see why we will most likely experience long term growth from the stock.
What Do You Think?
Where do you think GILD is headed and why? Let us know in the comments below!