1. How to use GuruFocus - Tutorials
  2. What Is in the GuruFocus Premium Membership?
  3. A DIY Guide on How to Invest Using Guru Strategies
Articles (282) 

Analyzing Why Gilead Sciences is Still a Great Buy

July 24, 2014 | About:

Shares of Gilead Sciences (NASDAQ:GILD) have gotten pleasantly since mid-April, picking up around 24%. Gilead's strong execution has been determined by its strong first-quarter results, when it reported strong income development.

Indeed, Gilead reported net income of $4.9 billion in the first quarter of 2014, up 104% from last year. Its income beat analysts' estimates of $3.92 billion convincingly. The increase in income is credited to the dispatch of Sovaldi, a medication for curing Hepatitis C disease.

Gilead posted strong sales in the U.S., surpassing $3.6 billion, and shockingly, European sales surpassed $1 billion in a single quarter. This execution has been determined by extraordinary request in the company's center HIV business and the dispatch of Sovaldi, which put in a strong execution with sales totaling $2.3 billion in the quarter. In the mean time, sales of the HIV drug Stribild rose to about $215 million for the quarter, up around 100% from the last year.

So, Gilead is developing pleasantly, and going ahead, the company should have the capacity to proceed with its strong execution because of its smart strategies.

Solid prospects

Out of the various drugs and medicines that Gilead makes, Sovaldi is relied upon to realize a huge blast in sales. Sovaldi's profile has the bore to transform the treatment of Hepatitis C. The company is selling Sovaldi for $84,000 for every treatment cycle of 12 weeks. On the other hand, Gilead had gone under criticism at the high cost of Sovaldi.

In any case as of late, the Centers for Medicare and Medicaid Services proclaimed that the social wellbeing insurance project will now take care of the costs of HCV screening for some 50 million Americans. This will incorporate the cost of one or various screenings for every year for individuals. Since the social wellbeing insurance project will now take care of the costs, analysts anticipate that Sovaldi's sales will increase. Ian Somaiya, an analyst at Nomura Securities International, said,

"The decision to pay for testing "should increase the rate of diagnosis and at least help CMS settle on educated treatment decisions. The net of this points to higher Sovaldi sales."

Out of the millions of individuals suffering from Hepatitis C, around 2.7 million are in the U.s. itself. Sovaldi is among the most proficient medicines accessible in the business sector as it might be taken orally and it has no side effects. Since its dispatch, give or take 32,000 patients have started treatment for Hepatitis C with Sovaldi. Presently, Gilead sells Sovaldi in 13 countries, and it plans to extend its sales in different countries as well.

Stribild picking up steam

For HIV, Stribild is among the heading HIV regimens for patients that were starting help. It arrived in three out of 10 prescriptions of Gilead's single-tablet regimens, including Stribild, Complera/Eviplera, and Atripla. In the United States, nine out of 10 patients new to the treatment of HIV were prescribed the Gilead solution, with Gilead's single-tablet regimen being used by seven out of 10 patients new to treatment.

The two Phase 3 studies analyzings the single tablet regimen of ECF TAF in Stribild in treatment of gullible patients are completely enlisted and the company expects information to wind up accessible in the final quarter of 2014. This STR is continuously assessed in different studies, including treatment of accomplished patients, patients on stable help, patients with mellow to-direct renal hindrance, and in adolescent patients as well.

Also, results from the Phase 2 study assessing GS-5816, the cutting edge skillet genotypic Ns5a inhibitor, were presented. Treatment of patients with genotype 1 through 6 with GS-5816 with sofosbuvir for 72 weeks resulted in Svr12 rates of 86% to 100%, while the start of Phase 3 studies of an altered dose mix of GS-5816 and sofosbuvir are normal in the recent 50% of this year.

The company is concocting new programs for its center business in the field of HIV, while Sovaldi continues to quicken the development and benefit of the company.

A gigantic business

I anticipate that Gilead will almost arrive at $7 billion in sales in 2014. Here's the means by which:

Analysts' estimate for Sovaldi sales is exceptionally conservative . Sovaldi's Trx for the sixth week came in at 2,488. So, on the off chance that I assume that this number stays constant all through 2014, (which is to a great degree conservative given that it does exclude sales from different regions such as Europe) Sovaldi could rake in over $6.8 billion in income. Here's the way.

2, 488 x 50 (weeks) x $55,000 (normal overall value for every patient after discount) = $6,842,000,000."

So far, just 32,000 prescriptions have been issued, and given that there are almost 3.2 million individuals suffering from Hepatitis C in the U.s. itself, Gilead still has a considerable measure of room to develop.

Key analysis

Separated from having robust prospects, Gilead also has strong fundamentals. The company trades at a trailing P/E proportion of 30, while its advance P/E degree of just 10 indicates that its earnings are required to develop at an awesome rate. Also, the company has strong cash stream metrics. In the last twelve months, Gilead has produced working cash stream of $4 billion, while its levered free cash stream is $3.28 billion.

Be that as it may, one risk for Gilead is a high obligation figure. The company's obligation stands at a massive $9.80 billion, while it has cash of $6.47 billion. This indicates that the company is needing to pay a gigantic interest to service its obligation. Be that as it may then, strong cash stream era should permit Gilead to bear on its business without much inconvenience and development in sales of Sovaldi will prompt strong development in income and earnings.

Last words

Taking a gander at Gilead's strong development prospects and fundamentals, the company looks like a solid purchase. So, investors should most likely consider investing in this high-development play for long haul gains.

Rating: 5.0/5 (1 vote)



Please leave your comment:

GuruFocus has detected 5 Warning Signs with Gilead Sciences Inc $GILD.
More than 500,000 people have already joined GuruFocus to track the stocks they follow and exchange investment ideas.

Performances of the stocks mentioned by JuhiKulkarni

User Generated Screeners

alexbernal0martin base
patelmhshort screener 1
pbarker46F Score and P/TBV
star1907Good company's
star1907Best dividends charlie
cspunarSpunar Div
patelmhMY VALUE
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)

GF Chat