Seeking Alpha

jstratt

jstratt
Send Message
View as an RSS Feed
View jstratt's Comments BY TICKER:
Latest comments  |  Highest rated
  • Evidence-Based Investing: 5 Easy Reasons Why You Should Copiously Buy Gilead Sciences [View article]
    As a GILD bull I am slightly troubled by this article.

    I could write an article suggesting GILD should have the CELG PE and trade at $480 and many would like it and cheer profusely. But the truth is investors vote with their money and are quite sophisticated in most cases.

    Two years ago GILD was a company with bright prospects. Last year those prospects came to fruition and earnings quadrupled. This year earnings may rise 50%. HCV is a long term game and GILD a great value. At the same time a biotech company ages fast.

    Next year a new competitor arrives in MRK but ROW growth in HCV and TAF for HIV offer promise of some growth and especially when combined with share buybacks. In coming years GILD will still be the leader in HCV and HIV however in HCV 4 or more competitors will emerge.

    Pharma history shows that when companies get to the current GILD size they have trouble growing. In a couple of years that will be especially true for GILD with $20 bil in HCV revenue. The sophisticated investors modeling 5 years out with big money at stake drive the value of GILD stock and penalize GILD based on those models.

    So I think GILD will take steps to strengthen their pipeline and make it more visible. That is important because neither HBV or NASH will likely match the historically huge and record setting success of HCV. If you really want GILD shares to rise then you should want a robust pipeline. Improving lives thru better health can be an insanely profitable business.

    Share buybacks can be a great tool to improve value. However the growth you want as shareholders can only come thru building a strong vibrant growing company. Buying shares can increase share value arithmetically, but building share value geometrically requires building the business value.

    GILD today is making decisions which determine value in 2020. What I am hoping for is a pipeline to make GILD a $400+ billion market cap company. The list of companies that got to the current GILD stage and ceased to grow is long. PFE, MRK, AZN, LLY... and many others now bought out. Many have paid a dividend and bought back shares but have a zero 10 year return or worse.

    So think long and root for GILD to build an awesome pipeline. GILD has a great history as did the others mentioned. The outstanding leadership in place offers promise and with a pipeline that matches past performance we will all be very happy.
    Jul 31, 2015. 11:37 PM | 2 Likes Like |Link to Comment
  • Amgen: Solid Value With Buyout Potential [View article]
    I would just add that about 6 weeks ago I am guessing an article by DrX got me looking into AMGN a little deeper. In short what I saw was

    - Cost cutting helped increase EPS 50% in prior quarter
    - 4 major new drugs Repatha, Corlanor, Tilimogene and Kyprolis
    - PE was $157/$9.62 = 16.32 now still only 18.30 PE on 2015 EPS est

    AMGN was and is still a no brainer with Repatha giving investors the chance for a Home Run. I especially like a company with double digit growth as far as the eye can see trading at a reasonable PE.
    Jul 31, 2015. 06:13 PM | 1 Like Like |Link to Comment
  • Gilead Sciences Is At It Again [View article]
    Thank you! I enjoyed reading your thoughts.
    Jul 31, 2015. 05:59 PM | 1 Like Like |Link to Comment
  • Gilead Sciences Is At It Again [View article]
    Cora

    Interesting!

    Your comment seems to suggest that a treatment for NASH is unlikely. I am understanding that correctly?
    Jul 31, 2015. 10:21 AM | 1 Like Like |Link to Comment
  • Amgen: Solid Value With Buyout Potential [View article]
    Great article!

    Well stated AMGN is just positioned very well for steady long term growth.

    Repatha gives the investor Home Run potential but the entire pipeline is good. Excellent value given double digit growth and a PE below 18 on 2015 EPS estimates.
    Jul 31, 2015. 08:19 AM | Likes Like |Link to Comment
  • Gilead Sciences Is At It Again [View article]
    Thanks for a great comment!

    Pharma companies have found it hard to grow once they reach the GILD size. At MRK for instance the R&D spend last year was $7.2 bil vs GILD $2.8 bil.

    CELG when you add all the acquisitions and partnerships would be $10-13 bil. AMGN spent $4.2 on R&D.

    So I question why GILD is cutting R&D and whether GILD is active enough at present to build the company at a significant rate. It seems to be underspending peers in the marketplace and some by a large margin.

    Right or wrong I used market cap in my assessment because that is really what we hope GILD will achieve is a larger market cap. It offers a view but I also consider R&D as a percent of revenue.

    As an investor I am far from convinced that GILD is investing enough in R&D or has the diversification it needs given its cash flow. An acquisition will help.

    I appreciate your thoughts!
    Jul 31, 2015. 07:56 AM | 1 Like Like |Link to Comment
  • Gilead Sciences Is At It Again [View article]
    CSYJ

    Thanks! I did listen to the call though I did not catch the detail down to $420MM. Given the GILD lowballing of guidance in the past I suspect they will beat the expectations set out probably from ROW revenue.

    So I would be interested in your opinion on a couple of issues.

    1) R&D spending is low for a $170 bil company at less than 2% of market cap. AMGN, CELG and even MRK much higher

    2) GILD pipeline status
    Jul 30, 2015. 10:47 PM | Likes Like |Link to Comment
  • Gilead Celebrates Busted Payer Budgets [View article]
    Developing a cure for a major disease should be celebrated.

    The title of this article sounds cynical and mean spirited!
    Jul 30, 2015. 05:42 PM | 28 Likes Like |Link to Comment
  • Gilead Sciences Is At It Again [View article]
    We couldnt agree more and I think that will happen. Good luck to you!
    Jul 30, 2015. 02:03 PM | 2 Likes Like |Link to Comment
  • Evidence-Based Investing: 5 Easy Reasons Why You Should Copiously Buy Gilead Sciences [View article]
    777

    Thanks for the kind words and Yes we think alike.

    I own and believe in GILD and its management. It remains my largest position. GILD is a great value at present. I believe it has stable growth from HCV/HIV and personally I believe GILD will have significant HBV and or NASH revenue in its future.

    At the same time the market is penalizing the value of GILD because not everyone sees the evidence as you and I do. So I merely suggest that we are in a time where a company like CELG stuffs their pipeline and is getting a PE nearly 4 times that of GILD.

    I dont want GILD to emulate CELG but I do want them to invest in the biotech business and I think they will. If GILD would invest $10 billion or 50% of cash flow into future biotech business I believe it would be a $200+ billion market cap company.

    Share buybacks are fine but I guess I am saying GILD would get a $30 billion improvement in market value for a $10 billion investment in its future. At least the market suggests that to me..
    Jul 30, 2015. 01:42 PM | 6 Likes Like |Link to Comment
  • Evidence-Based Investing: 5 Easy Reasons Why You Should Copiously Buy Gilead Sciences [View article]
    We can differ!

    - buying shares is investing in the pipeline? really!

    - if you take out the HIV and HCV maintenance research the pipeline is small and near term revenue generation is smaller

    I am a bull on GILD! I have confidence that management will advance a pipeline.

    At the same time investors for a year clearly conclude that GILD deserves a 10 PE regardless of what you or I think. So would it hurt to invest in the business?
    Jul 30, 2015. 10:59 AM | 4 Likes Like |Link to Comment
  • Gilead Sciences Is At It Again [View article]
    The answer is on the GILD conference call in Q&A.

    GILDs guidance suggested lower sales for the rest of the year. When asked I think it was Paul Carter stated that was because they expect revenues to drop in the 2nd half.

    Bulls like me think GILD is purposely underestimating so they can beat in 3Q.

    The big money uses models which discount expected performance 5 years out. They see HCV competition and dont see a pipeline that will sustain a $170 billion company long term hence the low PE.
    Jul 30, 2015. 10:25 AM | 1 Like Like |Link to Comment
  • Evidence-Based Investing: 5 Easy Reasons Why You Should Copiously Buy Gilead Sciences [View article]
    Thanks for a interesting innovative viewpoint.

    GILD is a great company and a good value.

    I do think the author is wrong in that every company needs to invest for the future. He should invest in IBM if he thinks buying shares is the key to great returns.

    In arguably the greatest period of medical innovation in history I would argue that investing in biotechnology will provide better returns than buying shares.

    If GILD wants to keep doing what it does well which is a point with some merit perhaps investing in early stage partners would be a good strategy. In a period with innovation opportunities abound it seems questionable to hoard zero return cash at the risk of future decline.
    Jul 30, 2015. 10:08 AM | 4 Likes Like |Link to Comment
  • Gilead's Next Big Acquisition: Where Will They Expand? [View article]
    I would add that in my mind the real key for GILD is to invest in the future an appropriate amount to grow the business. It could be acquisitions, partnerships, or internally generated drugs.

    I was happy to hear Milligan recognize the value in innovation because the $1.7 bil used to buy back 1% of stock can generate huge returns when invested in growing the business. The market does not want GILD to starve its future.

    We are in a historic period of biotech innovation and a true biotech company is investing in the future rather than trying to play short term financial games.
    Jul 29, 2015. 06:19 PM | 1 Like Like |Link to Comment
  • Gilead Beats And Raises: Thinking Through The Future Of Its Business And Its Stock Price [View article]
    Ptatty

    I was one of those frustrated but remain long and strong.

    I thought it was especially good news when MRKs CEO came out yesterday and said they dont intend to compete with GILD on price in HCV.
    Jul 29, 2015. 05:52 PM | 1 Like Like |Link to Comment
COMMENTS STATS
3,104 Comments
4,829 Likes