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GILD buy under $46.50 - rising earnings and free cash flow

|Includes: Gilead Sciences, Inc. (GILD), RHHBY


• GILD - low valuation biotech  with a 5% free cash flow yield that will grow to 7% in next 3 years  and  it is trading at a discount to its earnings growth rate .  P/E 2010 13x   -     G 16%
• Solid BUY in this volatile market with fingers crossed on its pipeline and Tamiflu for upside.
•Atripla and Truvada are currently enjoying  expanding growth on its core products which represents 68% of revenues.
  Core products in HIV experienced sequential increases in sales from new gov’t testing programs and more doc’s prescribing the drugs for treatment in naive patients.
• TamiFlu sales may see boost from stronger viral activity in next few years.
• To justify significant upside, GILD must realize success in its pipeline for HIV and PAH.

Key Factors

• Management is skilled at combining drugs.
International Expansion plans include entering Belgium before the end of 2009 and entering Switzerland and Australia in 2010.
• Stock held its value in 2008, but has trailed in 2009.
• Free cash flow will grow from a decline in costs from lower supplies costs for key core products.

Risk Factors
• Pipeline needs to replace core drugs in 2012.
• Pipeline has small revenue indications.
 U.S. HIV market is saturated.
I am long GILD.