Gilead Sciences: 5 Different Insiders Have Sold Shares This Month

Nov.25.13 | About: Gilead Sciences, (GILD)

In this article, I will feature one biotech stock that has seen intensive insider selling during the last 30 days. Intensive insider selling can be defined by the following three criteria:

  1. The stock was sold by three or more insiders within one month.
  2. The stock was not purchased by any insiders in the month of intensive selling.
  3. At least two sellers decreased their holdings by more than 10%.

Gilead Sciences (NASDAQ:GILD) discovers, develops, and commercializes human therapeutics for the treatment of life threatening diseases in North America, Europe, and Asia.

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Insider selling during the last 30 days

Here is a table of Gilead's insider-trading activity during the last 30 days.

Name Title Trade Date Shares Sold Rule 10b5-1 Current Ownership Decrease In Ownership
John Milligan COO Nov 7-14 791,270 Yes 564,774 shares + 395,634 options 45.2%
Norbert Bischofberger EVP Nov 14 90,000 Yes 2,158,681 shares + 270,000 options 3.6%
Robin Washington CFO Nov 6 2,869 Yes

22,826 shares

11.2%
John Martin CEO Nov 1 282,242 Yes 4,057,121 shares + 282,242 options 6.1%
Gregg Alton EVP Nov 1 30,000 Yes 38,938 shares + 200,742 options 11.1%
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There have been 1,196,381 shares sold by insiders during the last 30 days. More details about the Rule 10b5-1 trading plan can be found from this link.

Insider selling by calendar month

Here is a table of Gilead's insider-trading activity by calendar month.

Month Insider selling / shares Insider buying / shares
November 2013 1,196,381 0
October 2013 477,242 0
September 2013 537,842 0
August 2013 570,962 0
July 2013 713,842 0
June 2013 422,242 0
May 2013 312,242 0
April 2013 326,210 0
March 2013 416,346 0
February 2013 312,242 10,000
January 2013 267,671 0
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There have been 5,553,222 shares sold and there have been 10,000 shares purchased by insiders this year. The month of November has seen the most insider selling.

Financials

Gilead reported the third-quarter financial results on October 29 with the following highlights:

Revenue $2.8 billion
Net income $788.6 million
Cash $2.8 billion
Debt $7.4 billion
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(Source: Earnings presentation)

Outlook

Gilead's guidance for the full year 2013 is as follows:

Net product sales $10,300 - $10,400 million
Non-GAAP product gross margin 74%-76%
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(Source: Earnings presentation)

Upcoming milestones

Gilead has the following upcoming milestones in 2013.

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(Source: Earnings presentation)

Competition

Gilead's competitors include GlaxoSmithKline (NYSE:GSK), Pfizer (NYSE:PFE), and Roche Holding AG (OTC:RHHBY). Here is a table comparing these companies.

Company GILD GSK PFE RHHBY
Market Cap: 113.88B 128.52B 208.17B 237.48B
Employees: 5,000 99,488 91,500 79,132
Qtrly Rev Growth (yoy): 0.15 -0.00 -0.02 0.04
Revenue: 10.67B 42.44B 56.25B 51.85B
Gross Margin: 0.72 0.70 0.81 0.75
EBITDA: 4.60B 14.92B 24.62B 19.79B
Operating Margin: 0.40 0.26 0.32 0.33
Net Income: 3.05B 6.25B 10.68B 12.09B
EPS: 1.82 2.54 3.62 3.51
P/E: 40.88 21.04 8.87 19.95
PEG (5 yr expected): 1.27 1.59 4.98 2.24
P/S: 10.29 3.02 3.68 4.54
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Gilead has the highest P/S ratio among these four companies. In Pfizer, there have been zero shares purchased and there have been 1,268,368 shares sold by insiders this year. Pfizer has also seen intensive insider selling during the last 30 days.

Conclusion

There have been five different insiders selling Gilead and there have not been any insiders buying Gilead during the last 30 days. Three of these five insiders decreased their holdings by more than 10%. Gilead has an insider ownership of 0.50%.

Gilead is trading at a P/E ratio of 40.88 and a forward P/E ratio of 24.13. The company has a book value of $7.10 per share.

Before entering short Gilead, I would like to get a bearish confirmation from the Point and Figure chart. The two main reasons for the proposed short entry are relatively high P/S ratio, and the intensive insider selling activity.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.