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Over 30 years of investing in individual stocks. Extensive business experience with small to mid-size companies, including as CEO. Many hundreds of blog posts on financial and economic matters since 2008. Focus on value with catalysts for upside price action. Background as a physician and... More
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  • Gilead Drops On Merck-Idenix News To First Support 5 comments
    Jun 9, 2014 11:18 AM | about stocks: GILD

    Gilead Sciences (NASDAQ:GILD), which sold off sharply this winter with the biotechs, then rebounded sharply following a blowout Q1 earnings report, has stalled near its all-time high of earlier in the year. It is down sharply today to challenge its 50 day sma. All the moving averages are in uptrends, and this looks to me like a case of profit-taking plus some response to short sellers targeting GILD. The stock is down on the news that Merck (NYSE:MRK) is acquiring Idenix (NASDAQ:IDIX) for almost $4 B.

    My take is that this is bullish for GILD, if anything, especially if one is looking for an entry point. It shows that Merck's pipeline isn't good enough to stand on its own. Perhaps more important, since it isn't Merck's style to take over a company for its lawsuit(s) against Gilead, it indicates to me that Merck sees durable and significant potential from the hep C space. That concern has weighed fundamentally on GILD, because Sovaldi-based treatment regimens cure the disease. If a product works too well, Wall Street doesn't give it the same love as if it merely controls the disease! Strange but true.

    Right now, my biggest uncertainty about GILD is the success of its TAF-based combos to replace the TDF (Viread; tenofovir) version it's using now. Is TAF clearly superior to TDF other than being much more potent? Will its smaller size in fact lead GILD to produce and market superior multi-drug combos that supplant Stribild et al?

    Anyway, back to today and Merck. I think that quickly this takeover and reflex sell-off will be forgotten.

    Disclosure: I am long GILD.

    Additional disclosure: Not investment advice. I am not an investment adviser.

    Stocks: GILD
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Comments (5)
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  • synchrogeddon
    , contributor
    Comments (378) | Send Message
    "Gilead Sciences ($GS)" = Goldman Sachs? :)
    Anyway I agree, this is overreaction and in wrong direction, I bought more of $GILD today.
    9 Jun 2014, 11:34 AM Reply Like
  • Rasna
    , contributor
    Comments (104) | Send Message
    Your earlier article on $GILD and the TAF vs TDF regimens was very good and thorough. I think that eventually the TAF regimen will win the day. Absent other information, I also see this sell off as profit taking and an attack by the short side. I added to my position on the dip.
    9 Jun 2014, 11:52 AM Reply Like
  • James Sands
    , contributor
    Comments (2601) | Send Message
    And Idenix = IDIX....
    9 Jun 2014, 12:31 PM Reply Like
    , contributor
    Comments (376) | Send Message
    If I didn't already have a full position in GILD, I certainly would have added to it today.
    9 Jun 2014, 12:47 PM Reply Like
  • JAC92651
    , contributor
    Comments (78) | Send Message
    I bought more on the dip. Also, from a seasonality perspective tomorrow is the start of a 30 day pattern with a 100% history for GILD which on average went up an average of 3.9%. I think this is a great entry point and should result as we approach the earnings date a new 52 week high for GILD.
    9 Jun 2014, 01:42 PM Reply Like
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