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jstratt

jstratt
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  • Buy Gilead Ahead Of The Upcoming Earnings [View article]
    133

    Excellent review!

    I would just add that I am becoming more comfortable with HCV stability and growth next year. More and more reports by experts suggest that allowing HCV to go untreated reduces life spans significantly and shouldnt be acceptable.

    My view is that treatment rates are a function of the years budget and not a reflection of demand. So I see a 20% increase in US budgets as an estimate. Add world growth on to that for continued GILD growth.

    The AASLD panel determining that HCV pricing is a good value carries with it a stamp of approval from the Health Care industry.

    Projections

    2Q $8.1 bil rev, $3.15 EPS non GAAP/ $2.98 GAAP

    2015 $31.5 Rev, $12.50 EPS non GAAP

    YE2015 stock price will likely be Q4 2014 ($2.43) and Q1-3 2015 EPS of $11.67 X 11PE = $128 on Dec 31.

    My FMV estimate would be $12.50 X 14 PE = $175.

    While I refuse to lower my estimate of valuation I dont think the market will reflect my personal outlook in 2015. A long term focus however will likely achieve substantially higher FMV's.
    Jul 14, 2015. 11:02 AM | 6 Likes Like |Link to Comment
  • Johnson & Johnson Q2 revenues off 9%; EPS up 7%; sales and op earnings growth decelerating [View news story]
    The way I think investors should view it JNJ is down 4% on EPS delivering $1.71 vs $1.78 last year, and down 8% on Revenues.

    The forecast is for EPS to drop 3% for 2015.
    Jul 14, 2015. 08:49 AM | 1 Like Like |Link to Comment
  • Target-CVS Agreement: Big Win For Gilead [View article]
    I am not sure why a CVS agreement for 2015 makes any difference to GILD longer term. Seems like rather thin logic rather than some of the very good reasons to buy GILD.

    As for CVS I think they are very forward thinking and will deliver impressive growth in EPS going forward of 15%. They trade at 21 X expected 2015 EPS.

    Both GILD and CVS are actually delivering long term growth. While much of health care has been rising with price increases, GILD is rising on innovation and CVS is rising on structural improvements. I view pricing increases as less sustainable longer term.
    Jul 14, 2015. 08:10 AM | 4 Likes Like |Link to Comment
  • General Electric's Buyback Potential, By The Numbers [View article]
    I would think that paying down the debt might be more of a priority. Some of the debt will go with the units but with $365 bil in debt it may be putting the cart before the horse to suggest any share buyback?

    GE's ROA or ROE is 1%. If a company has $1MM in assets earning $10k annually... how much would you pay for those assets?

    Just make some room to consider that because buyers have been found for $44 bil in assets doesnt mean any money is available to buy shares.
    Jul 13, 2015. 04:12 PM | Likes Like |Link to Comment
  • Sell Bank Of America Ahead Of Earnings To Avoid Further Losses [View article]
    I am overweighted in BAC and I wont sell prior to Earnings.

    BAC has had 4 subpar earnings in a row and I must admit I wouldnt mind having more WFC and JPM and less BAC going into earnings. Still BAC is projecting a big turn in EPS this quarter.

    We shall see...
    Jul 13, 2015. 02:53 PM | 1 Like Like |Link to Comment
  • New Dividend, Good News, Good EPS Growth, Good Pipeline Mean Upside For Gilead [View article]
    PS

    GILD's Cash Flow probably exceeds all the rest of Biotech combined
    Jul 11, 2015. 07:54 PM | 3 Likes Like |Link to Comment
  • New Dividend, Good News, Good EPS Growth, Good Pipeline Mean Upside For Gilead [View article]
    GILD Cash Flow

    I would just note that in the last quarter GILD had 5.7 billion in Cash Flow from Operating Activities. I am not sure how to predict CF looking forward. Is it

    - $5.7 bil X 4 = $22.8 with a 10% inc = $25 bil
    - Just $5.7 X 4 = $22.8 bil
    - or just $20 bil

    I will just subtract R&D spending and assume $20 bil is left over for now. Another $2.5 bil for the dividend leaves $17.5 bil to utilize.

    The $20 bil is about a 12% cash return on the mkt cap. Even if it were less GILD has quite a job to figure out what to do with it. Add the existing $14.5 bil in cash to the equation and $34.5 bil cash is 20%+ of the GILD mkt cap.
    Jul 11, 2015. 07:42 PM | 1 Like Like |Link to Comment
  • New Dividend, Good News, Good EPS Growth, Good Pipeline Mean Upside For Gilead [View article]
    My "Out of the Box" question/comment

    Would GILD every sell itself? I dont think it is likely but I will make some points

    1) John Martin is 63 yrs old
    2) GILD is severely undervalued and activists could get involved.
    3) I dont see GILD's favorite cornerstone type drugs available
    4) Cancer is priced at crazy multiples and JM has already suggested that immuno-oncology has many big players, not for GILD
    5) What about a JNJ or CELG acquisition or merger?

    My point is GILD is a $30 bil revenue company with current FCF at $16-$18 bil. If you are looking for the biggest steal in biotech it is GILD.

    A hugely accretive deal could be put together for both sides. CELG's research combined with GILD cash flow or JNJ renewing its future. Lots of other old pharma sitting on PE multiples 3X GILD would be interested.

    The other alternative is probably to buy back stock in greater quantities. GILD should be valued at a minimum of $150 and it would still be the cheapest and best company in the industry.
    Jul 10, 2015. 11:11 PM | 5 Likes Like |Link to Comment
  • New Dividend, Good News, Good EPS Growth, Good Pipeline Mean Upside For Gilead [View article]
    Thanks for an excellent article!

    It was about 18 months ago at the end of 2013 that GILD had $1.81 of EPS and using a conservative estimate I expect GILD to report at YE2015 $12.67 EPS or higher for a 7X increase.

    Over that same period the share price has risen about 50% from $75. So 700% increase in earnings vs 50% increase in share price.

    I thought perhaps someone else would find that interesting.
    Jul 10, 2015. 12:46 PM | 11 Likes Like |Link to Comment
  • IBM Just Changed The Game [View article]
    Kumquat

    I think I can add a little to your point. I was a shareholder of IBM for 25 years until a couple years ago. You may have noticed I wrote a cynical comment above.

    Sometimes companies communicate at people and even try to deceive investors. I know I have felt that IBM was an egregious practitioner of this. For a while it seemed really bad and in an utterly transparent manner.

    Lets just say that anyone who would invest based on IBM communications in the Rometty era would likely be distrustful. IBM was a great company and will again be a great investment. I made excellent returns for many years.

    I need to see them find their way forward once again. For now I am unsure if they would know the truth if it hit them in the face.
    Jul 10, 2015. 12:03 PM | 3 Likes Like |Link to Comment
  • Be A Cash-Holding Shark As The Market Bloodbath Approaches [View article]
    So your dollar is worth .97c after a year of tame inflation and god help you if you plan to eat or retire. Some might say that the dollar or other currencies are a losing investment.

    Lets say you had $1MM which with your philosophy someone would have to give you. You would invest in nothing! But it sounds like what you really would have done is wait until Oil crashed and with divine intervention you would pick the absolute bottom.

    May I suggest that you get a financial advisor! It should occur to you that if decline is the only path you can see, then you might not be the best person to manage your money.
    Jul 10, 2015. 09:41 AM | Likes Like |Link to Comment
  • Biotech At A Fraught Mid-Year: An Overview And Look Ahead [View article]
    In my mind they all compete selling drugs. What distinction they had initially is rapidly disintegrating.

    As always enjoy your work!
    Jul 10, 2015. 01:55 AM | 1 Like Like |Link to Comment
  • Regions Financial: My Top Choice In Regional Banking [View article]
    I dont want to present myself as an expert on RF. Still I have owned it since it traded in the $3 range and I do follow it.

    I dont have quite as bullish a view as the author and I am transitioning more toward the WFC/JPM/GS type financial holdings. My concerns include Oil related loans and the now 7 years of accumulating issues that banks generally have to clear out every 5 years or so. Also that the bigger banks have hugely profitable M&A and Bond issuance revenue sources.

    Also I would point out that RF is hiring financial consultants because they sold their brokerage business a few years ago and are trying to restart one from scratch.

    Many of those things are innuendo rather than facts. Still banks have been very good to me because I have followed my gut. As an example selling BAC and C among others in the $50+ range in late 2007 and buying back in the $3 range in 2009. I should add that I am not negative on RF. Just that other financial holdings offer what seems a better return and or risk profile.
    Jul 10, 2015. 01:05 AM | Likes Like |Link to Comment
  • Gilead Will Keep On Rolling [View article]
    Keep the faith fellow GILD shareholders.

    The HCV market is still growing as the world opens up. GILD has several arrows in its quiver.

    1) Counting scripts suggests that good earnings growth will continue for this year.

    2) GILD is trying to acquire some additional revenue sources and likely will achieve that goal

    3) They could easily buy 10% of shares in the rest of 2015 and 2016 to provide 10% growth.

    4) The pipeline is building

    5) GILD leaders have been excellent stewards of capital

    When HCV does begin to decline GILD will have a problem to overcome. But that time is not here and shares are trading as if decline was already a certainty. I find it hard to believe GILD will deliver less than $12.00 EPS in 2015 and that GILD should trade below a 10 PE.

    GILD has in place the ability to grow EPS by 10% in 2016 thru share buybacks alone. That should temper competition and its effects. So stay long and strong!

    We know that GILD is trading with analyst estimates of $10.79. GILD could easily jump to $14.00+ EPS before it levels off or starts to decline. Even if that doesnt happen lots of other investments have the ability to correct in a much more substantial manner to find FMV.

    Finally it is probably good that people are no longer writing comments about GILD suggesting people "bet the farm". If the situation does change we will likely figure it out here on SA before the analysts, just as we have for the past 2 years.
    Jul 10, 2015. 12:33 AM | 2 Likes Like |Link to Comment
  • Arch Coal - Bond Exchange Is A Win-Win [View article]
    I bought BTU today.

    They have a market cap barely higher than FCF and no debt due until 2018. For all the negativity about coal, I dont see a decline in demand on a worldwide basis. India is building coal plants rapidly as an example.

    Part of my thought process was that BTU is stronger than some other coal companies as a shakeout ensues. When the dollar weakens coal exports will be more profitable as well.

    Best of all is if things turn, coal companies scream higher.
    Jul 9, 2015. 04:59 PM | 2 Likes Like |Link to Comment
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