Gilead Sciences, Inc. (NASDAQ: GILD)
When earnings season rolls around, as with many other investors, I like to use the opportunity to move things around in my portfolio. So, I tend to look for great buying opportunities. If you’re doing the same, you might want to look very closely at Gilead Sciences. Here’s why…
Starting With GILD Earnings
In the spirit of earnings season, I figure the best place to start would be earnings. When it comes to Gilead’s most recent earnings report, the company completely blew expectations out of the water! The company released it’s first quarter earnings on April 30th. After reading their report, I was incredibly pleased. The company beat earnings per share estimates by $0.62 and smashed top-line revenue estimates reporting $680 million more than expected. As a result of the astonishing quarter, GILD made the decision to raise guidance. All in all, the Gilead Sciences earnings report was overwhelmingly positive.
Weak Investor Interest Is Making The Price Of GILD Very Appealing
While the earnings report was overwhelmingly positive, investors don’t seem to be interested. This is causing the stock to be undervalued; which is incredibly interesting to me. Because of the poor growth in the value of the stock throughout the year so far, I decided to dig deeper and see if I could find some bad news. If you’re doing the same, you might as well cut your losses and stop wasting your time. There’s no bad news out there to find. Revenue was great, that can’t be the problem. So, I decided to look into profit margins. Currently at an all time high, there’s nothing to complain about there. So, I searched the news for even a small tidbit of negative data…it simply wasn’t there. So, the poor growth is all about investor interest; which is likely to change in the long run!
This Stock Is Incredibly Undervalued
There has been a ton of talk about a biotech bubble. While I disagree with the concept that the biotech industry is in the midst of bubble activity, I can see where the argument is coming from. Overall, P/E ratios are climbing, and in the long run, that could pose a problem. However, when we look at GILD we find that the stock is severely undervalued. Currently, the P/E ratio of the stock sits under 10%. You’ll be hard pressed to find that kind of buying sign in any industry at the moment.
Gilead Has Control Of Major Markets
Finally, and I’ve talked about this quite a bit at this point, GILD has control over two major markets including HIV and HCV. While there are competitors in each market, GILD proves to have the superior treatment and continues to dominate with every piece of data they release. Not to mention, they are currently making a vie into the $100 billion per year cancer industry. Which, in the future, could be another industry the company plays a major role in.
What To Expect From GILD In The Long Run
If you can’t tell from what I wrote above, I’m definitely expecting great things from GILD in the future. The reality is that time and time again, the company continues to produce great earnings reports. Weak investor interest is keeping a low P/E on the stock and presenting a great buying opportunity; but I doubt that will last long. Also, with control of 2 major markets and entry into another, there’s no reason that GILD can’t continue to grow!
What Do You Think?
Where do you think GILD is headed and why? Let us know in the comments below!