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jstratt

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  • Updating My Price Target On Gilead Sciences [View article]
    Joetek

    I would point out that GILD does a poor job of communicating with investors. In Feb 4Q Bischofberger launches into a discussion of 46% discount and disastrous results.

    In yesterdays call GILD brings up HCV scripts have plateaued in the US. That was another blunder. The 3Q 2014 call was another blunder as everyone was surprised by the slowing sales preparing for Harvoni release.

    I dont suggest pumping the stock. Just not shooting shareholders in the foot. For all the brilliance in GILD and they are incredible, the communication is substandard.
    May 1, 2015. 04:13 PM | 1 Like Like |Link to Comment
  • Updating My Price Target On Gilead Sciences [View article]
    Alexander, Help me understand your thinking!

    So you take a conservative view of GILDs conservative guidance. Then you maximize expenses to be conservative.

    It makes me ask if your price targets have any accuracy? If you are low by a large amount every quarter wouldnt you want to revise your model?

    One could take another look and see

    1Q 2.94 7.6 bil revenue

    2Q - I see no reason to suggest lower results $3.00 7.8 bil revenue

    3Q - last year patients were holding back waiting for Harvoni launch and a huge beat would seem fair. $3.00 8.0 bil as world continues to kick in.

    4Q - I will subtract $1 for discounting so $2.06 and 6.6 bil revenue

    So $11.00 EPS on 30 billion revenue seems more like a reasonable but still conservative estimate.
    May 1, 2015. 11:23 AM | 7 Likes Like |Link to Comment
  • Gilead Smashes Q1 Estimates; How Will The Market React This Time? [View article]
    Interesting article!

    "and this should put to rest concerns about GILD's gross-to-net adjustment"

    I am bullish on GILD but if the authors statement above was true... the stock would be trading much higher than $103.

    GILD will likely breakout at some point soon but dont expect the bears to go into hibernation.
    May 1, 2015. 09:45 AM | Likes Like |Link to Comment
  • Gilead Delivers Another Blowout Quarter [View article]
    I would put $20+ billion on the size of the HCV market with most of the world just getting started.

    The GILD business prospects are nowhere near being fairly valued!
    May 1, 2015. 09:37 AM | Likes Like |Link to Comment
  • Gilead Proves Golden: The Importance Of Its Beat-And-Raise Quarter [View article]
    Things I liked about the GILD results

    - I liked the revenue of $7.6 bil about 10% above guidance
    - I liked the Gross Margin coming in at 91% (above 87-90 est)
    - I liked the cash flow because I thought $14.5 was a good est for 2015 . Now $18-20 bil seems to be a good estimate.
    - I liked the pipeline as it seemed more robust and more immediate
    - I liked the $2.94 EPS because it put GILD at 10.5 ttm PE and where I previously expected $10 EPS, $11 2015 EPS now seems more reasonable.
    May 1, 2015. 09:28 AM | 4 Likes Like |Link to Comment
  • Gilead Sciences beats by $0.62, beats on revenue [View news story]
    I was hoping for more of an initial pop in share price based on a big beat.

    Still I think that will come when analysts update their models.
    Apr 30, 2015. 04:30 PM | 1 Like Like |Link to Comment
  • Gilead - What Could Possibly Go Wrong This Time? [View article]
    Here is the bull case for valuation going into earnings.

    Hep C is valued based on 5 year expected revenue numbers like the following so if the anticipated market rises it will make a big difference

    YR 2015 2016 2017 2018 2019 Total GM% 5 yr GM
    REV exp 1/1 14 10 9 8 7 = 48 X .78 = $37.4


    Revenue and Gross Margin are the keys to valuing GILD. A 2015 estimate of HCV revenue going into earnings is $18 bil X .89 GM% = 16.02 billion in GM for 2015 and from script data seems very reasonable.

    When the year began the market for HCV was much smaller by evidence than what has turned out. Further the Gross Margin percentage being used was much lower given the new Viekira competition. Perhaps $14 bil X .90 GM%=$12.6 bil GM.

    If models update both the revenue and the GM% it could lead to big gains for GILD. Especially considering those gains will be extrapolated to a higher market over 5 years. The non HCV revenue should rise as well and expectations for the introduction of TAF in 3-4 months will aid the outlook.

    I am going to estimate $7.4 bil in revenue and $2.63 EPS but that is a guess and is well above consensus.

    Keep your eye on revenue and GM%. My estimates are below the $5 billion HCV revenue suggested in a recent article and the GM% is in the range of 87%-90% guidance. Any revenue with a 6.X will be a problem, above 7.2 should add value and if an 8.X comes you will be mad at yourself for not owning more shares.
    Apr 29, 2015. 11:24 PM | Likes Like |Link to Comment
  • Gilead's Predicament: Revenue And Earnings Are Unsustainable [View article]
    The question this article tries to address is what is the value of the GILD Hep C business?

    I believe the Hep C business should and will be priced at more than a 6-7 PE.

    Further the size of the business does matter and if the GILD Hep C market is $20 billion as referenced in the article ($5 bil x 4 qtrs) vs $14 billion from GILDs guidance ($26.5 bil rev - $12.5 bil non HCV rev) it is a huge difference.

    Regarding profitability we were guided to 87%-90% gross margin. High revenue should impact GM in a positive manner. I do not know but I question if much discounting impact will occur?

    My best estimate is that GILD 2015 HCV revenue will be $18 billion X 89% GM = $16.02 GM - $12.39 GM ($14 bil revenue X 88.5% GM) = $3.63 billion additional GM over expectations set on Feb 2. That is a 29.3% increase in GM.

    I do agree with SPA that a one time increase in EPS will not move the stock. The following factors will move the stock

    - higher projected 5 year revenues for the HCV market
    - the increasing size and duration of GILDs share of that market
    - higher GILD profitability from the HCV market than expected
    - better ability to forecast the market (ie reduced risk)
    Apr 29, 2015. 03:02 PM | Likes Like |Link to Comment
  • Gilead - What Could Possibly Go Wrong This Time? [View article]
    Lots of things could go wrong!

    Dont forget that very successful investors and institutions with sophisticated research and huge resources are not buying as GILD trades at $103.

    That said I am comfortable with my position in GILD. They have a chance to really have a blowout earnings report. Further the downside seems limited.

    Good Luck investors!
    Apr 29, 2015. 09:58 AM | 5 Likes Like |Link to Comment
  • Gilead's Predicament: Revenue And Earnings Are Unsustainable [View article]
    SPA

    I actually like a well thought out negative case being presented on GILD and you make several important points. So one has to ask what is the HCV business worth?

    So I take $104 and subtract the non HCV business valuing it at $60 per share. Assuming a $3.00 per share and a 20 PE based on growth and the pipeline. Thus GILD's HCV business is valued at $44 a share.

    I use $7.00 2015 EPS expectation for HCV. $44/$7.00=6.29 PE. Under this computation 6.29 is 34.9% of a normal 18 PE.

    Whatever discount people want to put on huge and still growing HCV profits, it is unlikely to remain where it is. If it does I think pressure would come to split the company into something like

    GILD (non HCV with pipeline and growth at 20 PE) = $60
    KURE HCV only with a $4 dividend valued at 5% return = $80
    Apr 29, 2015. 08:42 AM | 1 Like Like |Link to Comment
  • Gilead's Predicament: Revenue And Earnings Are Unsustainable [View article]
    Thanks SPA for writing a well thought out article.

    I disagree with some of the conclusions and will offer a different view. Some points

    1) The market is already valuing GILD as losing 35%-40% of its revenue hence the low PE
    2) The total worldwide HCV market size is about to be increased by 10%-20% based on script data which will move GILD stock higher and directly contradicts the authors position of a declining market.
    3) I do think GILD HCV revenues will peak in the next couple of years and perhaps in 2015.
    4) While I seriously doubt Vertex will be bought, it seems unlikely that GILD will act as if it is handcuffed while years slide by.
    5) Merck is potentially a serious competitor in a year but far from the invincible giant outlined in the article. ABBV not so much! ACHN is worth about 2 weeks of GILD revenue so it is fair to say it is not considered a threat. BMY not much of a threat. All in all 2015 was supposed to be when all the competitors emerged and now it is maybe 2016.
    6) Why is it pharma companies in a decade long decline trade for twice the PE of GILD?
    Apr 29, 2015. 12:03 AM | 1 Like Like |Link to Comment
  • This Quarter In Biogen [View article]
    BIIB is a great company and I have a long term position. So yesterday I looked over BIIB statements and listened to the conference call.

    I noticed revenue growth issues with both Tecfidera and Avonex which make up 70% of revenue. I am not alarmed but I dont feel I need to chase BIIB.

    So I keep a watchful eye with my hands in my pockets.
    Apr 28, 2015. 12:22 PM | 2 Likes Like |Link to Comment
  • All You Need To Know About HCV From The EASL Conference This Weekend [View article]
    Thanks for a very informative article!

    Thoughts

    - Much more bullish for GILD than I realized
    - ACHN might be worth something to GILD more than the $1 billion mkt cap

    Can I have the 2nd best cure for my terminal disease? Really!!
    Apr 27, 2015. 09:14 PM | 2 Likes Like |Link to Comment
  • Gilead Will Keep Hepatitis C Dominance In Its Grip With Recent Trial Results [View article]
    Jade

    You could of course be correct but I would hope that 1Q will provide

    - better information on profit expectations for at least the rest of 2015
    - eliminate declining year over year forecasts for 2Q
    - validate GILDs stated 87%-90% gross margin guidance
    - smash forecasts that Hep C has peaked in revenue

    in short a higher ceiling and less risk.

    We never have a sure thing in markets. At the same time GILD has clearly shown revenue growth during 1Q from script data and I think it is a good position.

    As an example I saw a report of 7400 weekly TRx for 4Q 2014 and 1Q 10500 TRx which is data suggesting a 42% increase in volume for the US only. I feel sure worldwide sales opening up have exceeded US growth.

    So my point is those who have invested considerable time following GILD should have high hopes.
    Apr 27, 2015. 07:30 PM | 1 Like Like |Link to Comment
  • Gilead Will Keep Hepatitis C Dominance In Its Grip With Recent Trial Results [View article]
    I would say that many investors feel the risk is higher than they want given

    - The Liver conf research is a large amount of data with little consensus
    - Analysts are useless because they have such wide variances in opinion
    - Biotech has risen rapidly and is now in choppy water

    I bought some additional shares today at $102.60 based on the US TRX growth during 1Q and World growth kicking in.
    Apr 27, 2015. 04:09 PM | 1 Like Like |Link to Comment
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