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  • Gilead Sciences Has The Power To Push Higher [View article]
    Yahoo Finance reports 22 analysts are projecting an average of only 2% EPS growth for 2016, although there is a wide range in estimates. The PEG is 5 on this basis as opposed to the 0.8 that you state in your article. The current P/E of 10 is reasonable if growth stalls out after this year. For the stock to move higher, growth has to resume to double digits beyond this year.
    Jun 26, 2015. 09:09 AM | 3 Likes Like |Link to Comment
  • Gilead: Still My Next Apple [View article]
    Both Gilead and Apple will face growth problems in 2016. I expect Apple to sell off in late October, after their F1Q16 guidance shows a YOY decline from the record setting F1Q15. Gilead is expected to have flat growth and earnings next year. Buybacks are a way of bolstering EPS. I don't view them as a positive, since organic growth is much preferred to engineered growth. Merck's entry into the HepC space could put pressure on pricing and much of Gilead's pipeline has yet to be proven. A great 2015 doesn't mean the stock is undervalued. And its recent runup doesn't necessarily mean the market is finally recognizing its undervaluation. Look at 1999 and the tech crash in 2000. How many analysts who trumpeted their calls in 1999 crawled away with their tails between their legs?

    Still, I remain long on GILD (it's my largest holding), but hedge with options to mitigate risk. Why? I'm betting that they will find a way to stem the competition, be successful with their pipeline, and resume growth. But I'm not in the stock because it is "tremendously undervalued".
    Jun 25, 2015. 08:01 PM | 4 Likes Like |Link to Comment
  • Gilead Is Set For Another Strong Quarter [View article]
    Everyone expects a strong quarter and a strong 2015. The question is not what they will do this quarter or next quarter, but rather what will 2016 and 2017 bring when Merck offers more competition in the HepC space and Gilead's pipeline prospects are better understood. Until that question is answered, it cannot be argued that Gilead is undervalued. If revenues and earnings for the next few years are flat as many analysts predict, Gilead is reasonably valued at present. Even though I'm conservative about Gilead's prospects, it remains my largest holding, although I use options to mitigate risk.
    Jun 25, 2015. 04:31 PM | 8 Likes Like |Link to Comment
  • Profit From The Pharma Craze: Sell Gilead, Buy Taro [View article]
    Good article, and brave to face the legions of vindictive fanboys. I have the same concerns as IB (having voiced them in previous comments) but GILD is still my largest holding (although I use options to mitigate some of the risk). Gilead, like Apple, both rely on essentially one product for the majority of their revenues and earnings, and both trade at below market P/Es because of growth concerns. Both are using buybacks to bolster EPS and engineer EPS growth, a sign that there is real concern that organic growth is not there. Let's see how each of these companies does over the next few years. Btw, strong recent price movement (expounded by some commenters) is not evidence as to the correctness of a thesis. Performance is, and it will take some time to see what unfolds.
    Jun 24, 2015. 01:12 PM | 3 Likes Like |Link to Comment
  • Pick Up Celgene After 9% Pullback - It's Ready [View article]
    This is the kind of comment that SA could use more of, as opposed to the myriad comments that just root for a stock or give the boring details of their own stock positions.
    Jun 22, 2015. 06:52 PM | 2 Likes Like |Link to Comment
  • Gilead Goes Ex-Div: Now Let's Look At Its Sustainable Growth Rate [View article]
    It's ridiculous to value Gilead on its sustainable growth rate based on past ROE. It's all about the future, and with current revenues and earnings being so much larger than they were not too long ago (and largely dependent on HCV products), its future performance is unclear. Analysts project flat revenues and only 2% EPS growth next year, suggesting fair valuation if this proves to be on target and is also representative of outlier years. Comparisons with P/Es of peers who have much higher projected growth rates are ridiculous as well. I'm long GILD and it's my largest position as well, but have to admit that I am more relying on hope than rational analysis.
    Jun 12, 2015. 10:27 AM | 8 Likes Like |Link to Comment
  • Gilead Sciences: Approaching 52-Week Highs And Going Higher [View article]
    First of all, let me say that GILD is my largest position and that I added to it on this recent move. But to say that the stock is absurdly cheap assumes that it continues to dominate the Hep C space with little additional discounting, that it has success with its considerable pipeline, and that it achieves significant top and bottom line growth over a multi year period. Forget about the great 2015 that all agree it will have. What about next year? Currently, analysts are projecting flat sales and only 2% EPS growth for 2016. If these estimates hold, the stock is only fairly valued at its current price. My bet is that the analysts are being too conservative in next year's projections.
    Jun 11, 2015. 05:23 PM | 4 Likes Like |Link to Comment
  • Gilead Sciences: Approaching 52-Week Highs And Going Higher [View article]
    They didn't mean to say they bought 1000 shares. They just forgot the decimal point.
    Jun 11, 2015. 05:08 PM | Likes Like |Link to Comment
  • A Rough Month For American Capital Agency [View article]
    I cut back on AGNC this week as I have come to accept the view that further declines in BV and stock price with increasing long rates could overshadow the dividend. I learned a long time ago not to fight the tape, and chose to act now and ask questions later.
    Jun 11, 2015. 03:50 PM | 1 Like Like |Link to Comment
  • American Capital Agency Corp. Gets It: The Potential Changes From Lowering Leverage [View article]
    AGNC's management has no incentive to buying back shares to support the share price, as it adversely affects their compensation. This needs to be changed.
    Jun 10, 2015. 12:11 AM | 2 Likes Like |Link to Comment
  • Gilead: So Much More Than HCV [View article]
    Good article and good comments. GILD is my largest position, despite the uncertainty in its growth prospects. Analysts are estimating less than 1% revenue growth and only 2% EPS growth for 2016. If one assumes that Gilead earns $16 B indefinitely (i.e., zero growth), DCF analysis shows that the stock is currently fairly valued. P/E comparisons with peers is nonsense, as growth rates have to be taken into account.

    Buybacks should push the stock price higher even if the market cap stays constant. I'm betting that the pipeline works out and growth resumes, but it's just a bet at this point.
    Jun 9, 2015. 10:12 AM | 3 Likes Like |Link to Comment
  • Closing A Position In A Health Name For A Healthy Trend Name [View article]
    The question is really GILD's growth after this year. There's no question that 2015 will be stellar, with some 21 analysts polled on Yahoo Finance estimating 34% YOY EPS growth on average. But these same analysts estimate only 1% YOY EPS growth for 2016. I agree with the author, but remain long GILD with OTM calls for some downside protection. Why? Hope. I am hoping that GILD will find new growth avenues. They have a lot of irons in the fire, and hopefully, some of these will pan out.
    May 26, 2015. 11:54 AM | 9 Likes Like |Link to Comment
  • Apple To $140: Making Higher Highs And Higher Lows; Funds Desperately Want Back In [View article]
    I'm going to predict that the price of Apple stock will fluctuate.
    May 25, 2015. 08:18 PM | 7 Likes Like |Link to Comment
  • A Critique Of Carl Icahn's Apple Fair Value Revaluation To $240 Per Share [View article]
    Icahn's projections are ridiculously overoptimistic both on the top and bottom lines. I believe he is simply trying to financially engineer a big payday for himself, as increasing the buybacks will be beneficial to the stock price.

    Apple is currently fairly valued based on Yahoo Finance analyst projections. Some 40-45 analysts project average revenues of $231 B this year and $244 B next year. YOY revenue growth for FY2016/2015 would only be 5% based on these estimates. They project average EPS of $8.99 this year and $9.66 next year. So YOY EPS growth would only be 7% over this period. And about half of the EPS growth is from buybacks, not organic growth.

    The P/E calculated from these estimates is 14.5 based on this year's EPS and 13.5 based on next year's. With 7% EPS growth, the PEG is around 2, indicating reasonable valuation.

    The problem is the lack of significant long term growth. Apple is not a 20+% grower anymore, 2015 excepted. Icahn knows this but publicly states the opposite just to get a big payday for himself.
    May 21, 2015. 04:48 PM | Likes Like |Link to Comment
  • Carl Icahn Is Wrong, Apple Is Not Worth $240 Today [View article]
    A very rational article. Carl wants increased buybacks which by themselves push up the stock price. The more he can convince Cook that the stock is undervalued, the better his chances of getting him to increase buybacks. His $240 price target is totally unrealistic. For one, 2016 EPS will be closer to $10 than $12. Yahoo Finance has $9.64, up only 7% from their 2015 estimate of $8.99. My own estimate is $8.63 for 2015, and flat to down EPS in 2016 despite the buybacks, and I consider myself a better analyst than Icahn and most Wall Street analysts. Because EPS growth will stall next year, the stock deserves a low multiple. Will the iphone7 come to the rescue? Who knows? And Icahn's contentions abut the TV and automobile are absurd at this point.
    May 19, 2015. 09:46 AM | 7 Likes Like |Link to Comment