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Thoughts On Gilead Earnings

|Includes: Gilead Sciences, Inc. (GILD)

Gilead reported earnings after the close on 2/3/15 and shares dropped approximately $10. GIlead reported:

  • Revenue growth of 134% yoy
  • EPS growth of 363% yoy
  • Average HCV discounts of 22%
  • Initiated $1.72 annual dividend
  • Authorized 5 year $15B stock buyback program

And 2015 guidance of:

  • $26-27B in sales
  • 87-90% gross margin
  • HCV discounts of 46%
  • Approximately 15% EPS growth

In my opinion $GILD shares are even more attractive now that the company will begin paying a dividend and has authorized a buyback that currently equals around 10% of the outstanding shares. There seemed to be a lot of concern among analysts about the projected HCV discount of 46% next year, but I believe Gilead management generally issues conservative guidance. Even if 2015 guidance is dead on accurate, the stock is trading at a multiple of 13.3 with projected earnings growth of 15% for a PEG of 0.89.
If shares drop any further this week, I may add to my position.

Seeking Alpha has some excellent articles that go in to much more detail on $GILD

I have found Bret Jensen's articles on $GILD and many other securities extremely helpful. Here is one of his most recent.

Jason Russ and Anthony Clarke also have some good analysis of $GILD

Disclosure: The author is long GILD.