Gilead Sciences Inc. (GILD, Financial) delivered a poor performance last year. The stock lost over 24% in 2016, caused by a drop in sales of products that treat hepatitis C. According to Ben Levinsohn in a Barron's article, the decline was also attributed to the company’s lack of a plan for the future.
Bearing that in mind, RBC analyst Michael Yee disclosed questions investors should ask Gilead management  after the company's fourth-quarter 2016 results.
Here are some of Michael Yee’s questions, as reported by Barron’s:
- Do you sense that U.S. hepatitis C scripts are finally flattening out and visibility and predictability is significantly better than last year?
- Gilead recently struck a deal with Express Scripts Holding (ESRX, Financial) and Harvoni is now on the formulary with preferred access with AbbVie (ABBV, Financial). How did this come about and how do you anticipate this will impact share for 2017 in the U.S.?
- What has Merck (MRK, Financial) been doing in the U.S. hepatitis C market and is most of their share gains all from AbbVie?
Â
Gilead closed at $76.38 per share yesterday, up $2.22 or 2.99% from the previous trading day, with 13,463,800 shares traded on Nasdaq. Year to date, the stock gained 6.66% or $4.77 per share.
The 52-week range is between $70.83 per share and $103.10 per share and the stock is less volatile than the stock market with a beta equal to 0.88.
Gilead has a market capitalization of $100.63 billion and the trailing 12-month price-earnings ratio is 7.06. The EPS (TTM) is $10.81.
The company pays a quarterly dividend of 47 cents per share and the dividend yield is 2.63%. The payout ratio is currently 16.71%.
As of today, analysts recommend to buy shares of Gilead Sciences Inc. with a recommendation rating of 2.2. The rating ranges between 1.0 (Strong Buy) and 5.0 (Sell).
The analysts set an average target price of $95.19 per share. It ranges between a low of $74.29 per share and a high of $118 per share.
For the fourth quarter of 2016, analysts estimate EPS of $2.62, which represents a 21% decline on a year over year basis. In the same quarter in 2015, the company reported EPS of $3.32.
Over the last three years, Gilead reported increasing EPS, from $3.08 billion in 2013 to $18.11 billion in 2015. This represents a 487.99% increase. During the same period, the company’s revenue increased by 191.42%, from $11.2 billion to $32.64 billion.
However, due to the aforementioned reasons, the company reported decreasing quarterly EPS and revenue over the last 4 quarters. Revenue decreased by 11.9%, from $8.51 billion in the fourth quarter of 2015 to $7.5 billion in the third quarter of 2016. Earnings fell 28.84% in that same timeframe, from $4.68 billion to $3.33 billion.
At the moment, the stock is trading at 5.99 times the book value and 5.52 times the Ebitda. The company had $12.27 billion in cash on hand as of the most recent quarter. The total debt amounted to $27.07 billion.
Gilead Sciences has approximately 1.32 billion shares outstanding, of which 1.31 billion can be traded on the stock market.
Of the company's shares outstanding, 0.60% is held by insiders and 83.40% is held by institutions.
During the third quarter of 2016, John Rogers (Trades, Portfolio), T Rowe Price Equity Income Fund (Trades, Portfolio) and First Eagle Investment (Trades, Portfolio) increased their positions by 6.18%, 3.64% and 220.65%. Joel Greenblatt (Trades, Portfolio), Ronald Muhlenkamp (Trades, Portfolio), David Dreman (Trades, Portfolio), NWQ Managers (Trades, Portfolio), Mario Gabelli (Trades, Portfolio) and Ken Fisher (Trades, Portfolio) reduced their positions.
Disclosure: I have no position in any stock mentioned in this article.
Start a free 7-day trial of Premium Membership to GuruFocus.
