"Of all the stocks that I follow and recommend, there is one stock above all others that I have favored for years, and still do: Gilead Sciences (NASDAQ: GILD)," says biotechnology sector expert Michael Shulman.
In his industry-leading ChangeWave Biotech Investor, he explains, "I have owned it for a very-long time and it is fast-growing and rock solid among all of the market uncertainty. When that uncertainty ends, GILD will still be a fast-grower in a recessionary economy."
"The company is a commanding market leader in HIV treatments, sells and collects royalties on other antivirals for flu and Hepatitis B. Gilead recently announced earnings and it had profits of $402 million or 41 cents a share, topping analyst estimates by a penny. It also saw sales grow 22% to $1.1 billion. Despite several product launches and increased clinical trial expenses, the company's cash position doubled to $2.7 billion.
"On a conference call, management said that 2008 would be a very good year, with product sales in the range of $4.7 billion to $4.8 billion. That's more than a 25% increase over 2007 product sales and higher than analyst expectations of $4.6 billion.
"Growth was driven by HIV drug sales, which were up 35% last quarter to $864 million. Management does not guide profit expectations, but the Street has those profits at around $1.88 billion, and Gilead has beaten expectations 14 out of the last 15 quarters.
"Gilead bought Corus Pharmaceuticals and Myogen Inc. -- and GILD has made these acquisitions work for it. With them, Gilead has a new drug for pulmonary arterial hypertension, Letairis, and a potential new drug for cystic fibrosis infections awaiting approval from the FDA.
"Gilead expects an approval for the cystic fibrosis drug and also for its lead HIV drug, Atripla -- recently approved in Europe. Another drug should complete Phase II trials this year, as well. All of these catalysts will supercharge GILD and lead to double-digit sales and profit growth. At current valuations, the stock is cheap, as I believe Gilead will earn in the vicinity of $2 to $2.20 this year, giving it a P/E of 20-22.
"The market is also looking for big-cap names in life sciences, and money is flowing their way, so I expect multiple expansions to hit the stock once the market has stabilized a bit.
"One wildcard in the profits picture is Tamiflu. Gilead gets an 18%-22% royalty on it, and sales by Roche have slowed markedly as pandemic flu fears recede and governments are pulling back on stockpiling the drug. The other wildcard is a stock buyback or new acquisition by GILD. The former would goose the stock, the latter would depress it temporarily.
"The bottom line is that Gilead is a great company and a great stock building a strong base. It's facing several big catalysts and upside earnings surprises in 2008."
Each day, Steven Halpern's TheStockAdvisors.com offers the latest market commentary and favorite investment ideas from the nation's leading financial newsletter advisors.
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Reader Comments (Page 1 of 1)
2-19-2008 @ 2:34PM
gumbo koontz said...
Gilead is a good biotech but it is way overvalued!! At over $40 billion against only $4.5 billion in revenues... There is plenty of better buys elsewhere until Gilead grows to double the size or better before you can revisit there... A lot of our diseases stem chiefly from pollutions like firewood, charcoal, cigarettes, sewage stench in big cities, phantom gases, etc. More of us need to be more enlightened about those threats or dangers in order to minimize health costs. In other words, we dont really want or wish to admit growing numbers of sick patients into our hospitals or so called health industries... This is not an ideal concept of growing our economy. I prefer qualtitive growth over gluttonous growths in our economies based on ignorant tolerances of the public... This is a no-no!
2-19-2008 @ 2:41PM
gumbo koontz said...
If you still find my post a bit incomprehensible, well, very often, marginally healthy people are triggered by next door 's firewood smoke or driving in traffic and getting a whiff of mysterious phantom gases by some morons hauling craps around on wheels .. even sewage stench brewing out of manholes can trigger illnesses like severe headaches or even worse, strokes or heart attacks, etc... That is what I am trying to discuss about and I am suggesting that much of our consumption on pills and injections are triggered by those inpurities occuring anywhere one goes... It is still at unacceptable levels all over and we must work to control those. We are still measuring qualities of air, water and soil at wrong locations because they are often measured far away from where people interact on everyday basis. We must start measuring where people walk, drive, sleep, eat, etc.... This is the utlimate ugliness in statistics where environmental gauges are observed...
2-19-2008 @ 2:49PM
gumbo koontz said...
Additionally, it is naturally difficult to explain this to people who are still capable of tolerating such inpurities because of their youthfulness, ignorances, financial tolerances, you name it. It is a question of political liberty that those would fight to keep at great expenses to themselves , neverthelessly... If I were younger, I would be skeptical to those arguments . I am older and wiser . I dont know how old you are but it doesnt mean that I am giving up trying to convince you to appreciate the values of quality life over monetary gains at all costs... I know it is not going to be easy but more and more of us will see what it really amounts up to... So in your future assessments of other investments, you will likely begin to consider the qualities be it poor or great that goods and services are produced by those companies you deems as good investments or not. Yes, there will be sea changes coming up, I can guarantee you. Education is not going to accomplish much until financial awareness is includede and involved.
2-19-2008 @ 2:58PM
gumbo koontz said...
To make my point more blunt, Wall Street traditionally value stocks down when some kind of regulation covering environmental issues are being enforced on them. This will cease and instead rewarding them for enhancing enviornemtal impacts. Practically every kind of industry will be affected one way or not. Any company that continue to stonewall through legal matters that lingers on and on will see their stock swooning while more compiliant competitiors will get ahead. Public awareness about qualities of life will be iincreasingly immersed into our knowledge. It will not be about price to earnings ratios, etc. Probably, we will establish new indicators that measure qualities though intangibles they may be. It doesnt mean that we will abandon industries like coal, drug makers, automobiles, etc. We will learn to include values of intangibles into our evaluation of stocks....
2-19-2008 @ 3:01PM
gumbo koontz said...
I am sure that you will be so quick to laugh at my arguments. It will grow into your consciiousness later on as you will grow frustrated with the lack of action on environmental matter as you grow older and frail. Even many young people are already frustrated due to lack of tolerance and raised awareness. Sure, some wll still be stubborn and ignorant and liberty-strucken...
2-24-2008 @ 4:58PM
Bill said...
Gumbo,
You make some good points but your science is reallly weak. Odors and such may trigger a headache due to psycosomatic issues but there is absolutlely no evidence for heart attack over such things. Heart disease is well understood and comes from plaque in the arteries or electrical problems not from odor.
Besides GILD is making thier success on antivirals which have absolutely nothing to do with your comments.
I have owned GILD for 7 years and been well rewarded and I will stay with them. GILD is an extremely well run company with plenty of new things in the pipeline and will continue to grow and make wise acquisitions.
Even the Hillary has not targeted GILD - it is bio tech not evil big pharma!