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Edward Graham is Senior Analyst/Consultant, 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 developed a unique biotech investment... More
  • GILD buy under $46.50 - rising earnings and free cash flow 3 comments
    Nov 9, 2009 12:21 PM | about stocks: GILD, RHHBY.OB

    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.OB
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  •  
    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.
    23 Nov 2009, 01:45 PM Reply Like
  •  
    Technical keys for GILD to reach $60. First, it must break though $47.50 on strong volume and close above that price. I would add to the position if that event occurs. Then, the next crucial breakout barrier will be over $50. If the stock manages to close above $50, then $60 will be reached in 6 months.

    Of course, the keys will be fundamental execution on its existing products and its pipeline.

    Sorry for the delay in my response. I did not see your comment.
    20 Jan 2010, 09:42 AM Reply Like
  •  
    GILD will report fourth quarter and year end 2009 financial results will be released on Tuesday, January 26, 2010, at 4:05 p.m. Eastern Time. At 4:30 p.m. Eastern Time, Gilead’s management will host a conference call to discuss the company’s financial results for the fourth quarter and full year 2009 and provide a general business update and financial guidance for 2010. The conference call will be accessible via the internet from the company’s website.


    I would add to GILD on any pipeline stumbles or weak earnings. GILD has favorable trends for HIV in its favor and healthcare will run strong relative to the market as Gov't reform will not pass this year.
    20 Jan 2010, 09:34 AM Reply Like
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