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Gilead Sciences: Great Addition To A Dividend Growth Portfolio

Jun. 10, 2020 10:02 PM ETGilead Sciences, Inc. (GILD)71 Comments
Alexander Schiller profile picture
Alexander Schiller


  • Gilead's COVID-19 treatment Remdesivir has received enormous attention, but the stock is attractive even without considering it all.
  • Recent additions and initiatives indicate a return to growth prospects.
  • I particularly shed light upon the company's exemplary management, shareholder yield, and valuation.
  • Gilead is an attractive stock for any portfolio, but in particular, from a dividend growth perspective.

From a risk-adjusted perspective, I consider Gilead Sciences (NASDAQ:GILD) to be one of the most appealing investment opportunities right now. Gilead, being a large pharma company, is acyclic and recession-resistant, which are very important traits to possess with one of the most severe recessions in history looming. Moreover, with its medication Remdesivir, the company is positioned at the forefront of treating COVID-19, which suggests that it may be one of the few companies not hit hard by a possibly occurring second wave of the pandemic and might even increase its sales as a result of it.

However, while a lot of recent articles on SA have focused on Remdesivir's potential (e.g., here, here), Remdesivir will not be featured prominently in this article. I consider this both sensible and prudent as any further revenues and earnings based on Remdesivir are very hard to predict and inherently speculative due to enormous uncertainties regarding the medication's approval, its price tag, its future competition, and the number of people infected with COVID-19 in the future.

Instead, after a brief general overview, this article will focus on aspects that have not received much attention lately, namely Gilead's management, its recent shareholder yield and its cheap valuation even when not considering Remdesivir at all. In this way, it aims to show that Gilead poses an interesting investment opportunity, in particular as a dividend growth stock.

General Overview

For a holistic view, I suggest reading DoctoRX's great articles (Part 1, Part 2) in combination with this one. Nevertheless, I want to briefly summarize Gilead's operations from my point of view. Gilead's revenues are currently reported in four segments, of which I show the Q1 revenues in the following. In particular, it can be seen that, after several quarters of pretty much flat growth, Gilead was able to achieve a 5% revenue growth (partly driven by

This article was written by

Alexander Schiller profile picture
I hold a M. Sc. in Mathematics as well as a Ph. D. in Management Information Systems and currently reside in Germany. I have published several research articles in peer-reviewed journals on topics concerning data quality and data analysis and am passionate for investing. My eventual financial goal is to live off my dividends. I have an analytical mindset, love to think deeply and take differing opinions into account to form an educated knowledge base.

Analyst’s Disclosure: I am/we are long GILD. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Alexander Schiller is neither a certified financial advisor nor in any way licensed to give financial advice. Even though this article may seem like investment advice or a recommendation to buy or sell stocks or other securities, it simply represents an opinion. Do not buy or sell stocks or other securities based on the article - perform your own due diligence prior to any investment. Investing in stocks carries significant risk, which may lead to total loss of invested capital. The information presented in this article represents the author's knowledge and opinion based on thorough research and analysis, but no guarantee for the correctness, currency, completeness and consistency of the information is given. The author owns shares of Gilead Sciences.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (71)

Dr rx to retire
Any news about FDA approval beyond the emergency use? When? Should this be a high priority process for this particular drug considering the virus is still spreading in North America and around the world? May be not at the initial rate, but it is still affecting the economies of many countries around the world. When will GILD advise about the pricing structure?
Did they even submit an NDA for RDV? I don't think they did. This management is complete BS.
CaptainSolo profile picture
Yes they did. Last December. Remdesivir is in phase 3 of Gild/FDA trials. FDA approval for remdesivir will be the first for a coronavirus drug cure.

GILD sold $16 billion of HCV Epclusa in 2015. Don't you remember? FDA approved epclusa too. Biktarvy for HIV too.

GILD has over 90% of the HIV market - selling about $4.5 billion in HIV drugs every 3 months (quarter).
Paperone75 profile picture
Good analysis, thanks!
SO what fool is going to pay $4000 (rdv) + $5 (steroid) as a combo package when the cheap steroid provides most of the benefit in this combo? What? Gild fvcked this up majorly and overspent on a sh*t drug. Look for a major good will cost impairment write down. Hahahahahaha.
Alexander Schiller profile picture
Have you even read the article? Or are you just trying to push your short with multiple nonsense comments on the same article? I explicitly focus on Gilead with leaving Remdesivir out of the equation and show that Gilead still represents a compelling investment choice. A major goodwill impairment write down is impossible. Please keep it factual, this is a serious investment platform.
No facts are clearer than the price action. Since your article was published, how much as GILD gone down??? Yup. It's "investors" are choosing to dump this all-hype no substance company. No respect for GILD is why its been in decline since 2015 at $120.
Alexander Schiller profile picture
Actually it has gone up. Besides, this does not matter at all as short-term market movements are almost entirely not driven by fundamentals. Moreover, I wonder how more than $20 billion in annual sales are "all-hype no substance" ;-)
RDV bested by a common steroid. True waste of resources, $1 billiion plus on RDV. This company was a great short at $80 just recently. Will short it to $45 once I off load all shares at a loss. Pipeline is weak and they are losing HIV market share to their cheaper smaller competitor Viiv. Equity erosion is a given in this money incinerator. Good luck.
Alexander Schiller profile picture
Same to you! I will gladly buy the shares at $45!
AgileDave profile picture
The steroid only worked in very advanced cases. I'd rather get RDV (or HCQ in a free country) early, before I develop advanced condition. And the advanced cases still mostly died, steroid just improved the odds. By the time you're on the ventilator, any treatment is a hail mary.

Lots of meds in the toolkit that work for different conditions at different stages. Covid is not a single disease, it's a progression of diseases, and effective therapies require precise timing. Many therapies make it worse if given at the wrong time. Steroids work by inhibiting immune response, which is counterproductive in earlier stages.You need a really competent doctor to identify the right treatment. Many doctors aren't.
European investor 99 profile picture
@mercedesnyc worst comment I've read in a very long time. It is lacking facts, just an exaggeration to justify a short position. You really think GILD is all about RDV(wasnt even in pipeline 6m ago) and none of their other meds in development will sell with good profit? Out of like appr.40 (below link) and they just bought Fourty seven for a joke w/o any potentials ...just too many "assumptions" mate to justify a point. I am gladly buying GILD under $70 anytime:

13 Jun. 2020
I continue to believe the remdesivir "franchise" value will increase exponentially with the approval of a nebulized version--effectively a bridge to a vaccine, as administered upon early detection it will avoid hospitalization and allow for the buildup of antibodies. This, rather than late stage 5-10 day IV treatment, is the sweet spot...
caltiger profile picture
Are you aware of a time-frame by which this advancement may see the light of day?
Practically speaking 1 year.
CaptainSolo profile picture
Israel approves remdesivir drug for COVID-19 treatment seekingalpha.com/...
caltiger profile picture
I am curious to understand the prospect of NASH which was a subject of a lot of discussion about 2-3 years ago. GILD has directed a fairly significant amount of R&D, apart from small acquisitions, on NASH products. Has management given more insights as to how are they planning to address the NASH market, and improve on the results that they have achieved so far (which have been inadequate)? Shareholders need an answer from management on the R&D directed towards it till date.
Alexander Schiller profile picture
I feel that the new management is not focusing on NASH, and I actually like this stance, seeing how many proposed NASH treatments have failed in the past.
caltiger profile picture
Thank you for the article. It's good to know that the company still considers NASH a focus area. I hope that the prior investments in R&D and acquisitions will start to reap rewards in the next few years.
Stock is not doing good. Going down week after week. Will be back to retracing all YTD gains soon ... It seems that any and all catalysts are factored into the stock price so lower price reflects true value as part of the price discovery process. GILD to $65?
Alexander Schiller profile picture
Short-term price movements hardly correspond to fundamentals at all. Focus on the big picture and long-term gains.
CaptainSolo profile picture
Doctor says remdesivir use is "very compelling"


Remdesivir: US government's supply of Covid-19 drug runs out at the end of the month seekingalpha.com/...

So, like there is no competition for remdesivir and countries around the world are ordering it (and nothing else!). www.ksat.com/...
And stories about the cost of hospital stays news.yahoo.com/... make a possible $4,500 price tag for RDV seem very reasonable.
Yescarta will eventually face superior Car-T meds and Filgotinib seems to be inferior to upcoming non Jak-1 inhibitors. Those are my concerns.
cemanuel profile picture
I like GILD and have owned it for a while. But when it comes to buying it, I like it at $65 or less - added more in December. In order for me to buy it higher I'll need to see better growth numbers - though the company does seem to have ended the stretch of declining revenues. Right now it's trading high on Remdesivir. I'm not sure that's sustainable long-term. At some point I expect another treatment to come along, maybe even a vaccine.

Good dividend stock. Thank you for the article.
European investor 99 profile picture
Vaccine wont make treatments redundant. Just fyi.
Alexander Schiller profile picture
Thanks for your comment. I agree that the declining revenues should have come to a halt, and with Filgotinib (and possibly Remdesivir) as near-term catalysts, this should be seen within a year.
Right. Even with the development of a vaccine, treatment will need to be available because many will not get the vaccine and because the vaccine most likely will not be 100% effective.
staseramibutto profile picture
Interesting article.
Regarding buy back, you forgot to mention that everything that has been purchased has been assigned to management.
In few words there was no share reduction in Q1. And personal cost should add stock options to the total. It was more than 20% of the Q1 revenue.

This is why stock price goes nowhere. Management is acting against shareholders.
And trying to hiding this costs
Keith Williams profile picture
Nice article that gives an excellent overview of GILD. Thank you for referencing my article.
Alexander Schiller profile picture
Thanks for commenting. I read your article thorougly a few days ago.
Joel Irwin profile picture
Good article. I added to my GILD position today as mentioned in my May Portfolio update.
I'm now at a full position
Any sale of the company would have to be at a price in exces of $100
northernnomads3 profile picture
My largest holding. Trimmed 15% when it was in the low 80s.
Decouple from CCP now and forever.
Oldporkchop has spoken and you better listen.
Your summary is concise and understandable. I am in the stock for remdesivir. The dividend and the acquisitions are intriguing. I think the tie up with Arcus could be a sleeper. I think they have a portfolio of drugs that a deep pocketed well managed concern could benefit from codeveloping.
Alexander Schiller profile picture
Thanks for the comment. I concur that Arcus is intriguing, and am looking forward to see what will come out of the agreement.
@Alexander Schiller
You are preaching to the choir. I bought more GILD today to capture the dividend and possible capital gain. The stock has been basing solidly in the high 70's and likely to move into the 80's.
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