Gilead Sciences (GILD) Stock: The Discount Is Fading As Bulls Take Reins

Gilead Sciences, Inc. (NASDAQ: GILD)

Gilead Sciences has been one of my favorite stocks to follow for months now. Ever since I came across the stock, I’ve found the story of success to be one for the history books. However, there has been an ongoing battle between the bears and the bulls that has kept the price of GILD down; leading to an incredible discount. Nonetheless, after several days of upward movement that I’m convinced will continue, I am a strong believer that the discount mentioned above isn’t likely to last very long. Today, we’ll talk about the reason bears have kicked this stock down every time they could, why bulls absolutely love it, and where the next big climb is likely to start!

Why The Bears Have Taken A Bite Out Of GILD

As mentioned above, Gilead Sciences has traded at a discount for quite some time now. In fact, the stock still trades at a PE ratio that’s below 10. The reason for this is simple. Early this year, AbbVie, Inc. (NYSE: ABBV) received approval for Viekera Pak for the treatment of the hepatitis C virus, Gilead Sciences investors started to get concerned. After all, Gilead Sciences is the world’s leader in the treatment of hepatitis C and with a world-renowned biopharma company stepping in to compete, investors were concerned about GILD’s HCV franchise and its ability to maintain growth. However, those concerns have been put to rest in my opinion.

Gilead Sciences Has Proven Its Strength And Stability

All in all, I think that the tides are changing for Gilead Sciences; and it’s happening in a big way. It all stems from two major events that have happened recently…

  1. Regulatory Approval In Japan – First and foremost, Gilead Sciences recently received regulatory approval in Japan for Harvoni; its hepatitis C medication. This is absolutely huge news considering the fact that the Japanese market is one of the largest in the world; which is likely to lead to incredible profits!
  2. GILD Produced Strong Earnings – Also, a big key investors were looking for was the company’s second quarter earnings report. The reason for this was to see whether or not ABBV really did cut into profits and how badly it affected GILD’s bottom line. However, the earnings report proved that Gilead Sciences has nothing to worry about as the company beat all expectations.

As a result of the strong news above, Gilead Sciences has proven its strength and stability in the hepatitis C space and as a company as a whole. So naturally, we’ve seen strong movement in the market. While I’m expecting to see slow and steady gains in the short term, I think that the gains will increase in momentum when the stock breaks $122.21; where it has met resistance in the past. So, this one will definitely be one to watch moving forward.

What Do You Think?

Where do you think GILD is headed and why? Let us know in the comments below!

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