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Edward Graham is Senior Analyst/Consultant at GALVIN ASSET MANAGEMENT (US) INC., previously responsible for all healthcare positions in the UBS U.S. Small Cap Funds. He has 13 years of buy-side experience in Healthcare with a specialty in Medical Devices and Biotech investing. While at UBS, he... More
  • GILD buy under $46.50 - rising earnings and free cash flow 1 comment
    Nov 9, 2009 12:21 PM | about stocks: GILD, RHHBY.PK

    Thesis

    • GILD - low valuation biotech  with a 5% free cash flow yield that will grow to 7% in next 3 years  and  it is trading at a discount to its earnings growth rate .  P/E 2010 13x   -     G 16%
    • Solid BUY in this volatile market with fingers crossed on its pipeline and Tamiflu for upside.
    •Atripla and Truvada are currently enjoying  expanding growth on its core products which represents 68% of revenues.
      Core products in HIV experienced sequential increases in sales from new gov’t testing programs and more doc’s prescribing the drugs for treatment in naive patients.
    • TamiFlu sales may see boost from stronger viral activity in next few years.
    • To justify significant upside, GILD must realize success in its pipeline for HIV and PAH.

    Key Factors

    • Management is skilled at combining drugs.
    • International Expansion plans include entering Belgium before the end of 2009 and entering Switzerland and Australia in 2010.
    • Stock held its value in 2008, but has trailed in 2009.
    • Free cash flow will grow from a decline in costs from lower supplies costs for key core products.

    Risk Factors
    • Pipeline needs to replace core drugs in 2012.
    • Pipeline has small revenue indications.
    •  U.S. HIV market is saturated.
    I am long GILD.
    Themes: biotech, pharrma, drugs Stocks: GILD, RHHBY.PK
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This post has 1 comment:

  •  
    GILD hasn't hit a $50 share price since July and has been running in a narrow range for the most part since then. How likely is it that it will hit or surpass that share price when it reports this January? It's been priced in the $60 range by many analysts?

    Thanks.
    Nov 23 01:45 PM | Link | Reply
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