Gilead Sciences, Inc.: Why GILD Stock Could Surge 86%

GILD StockWhy GILD Stock Remains a Good Investment for Long-Term Investors

Gilead Sciences, Inc. (NASDAQ:GILD) stock lost more than 27% of its value year-to-date. GILD stock went down from its highest level of $111.11 per share to as low as $72.21 per share over the past 52 weeks. It is currently trading around $73.52 per share.

Gilead Sciences is a biopharmaceutical company focused on developing and commercializing treatments for the human immunodeficiency virus (HIV), liver diseases such as hepatitis C and hepatitis B, cardiovascular conditions, respiratory diseases, and inflammation. The company also focuses on the fields of hematology and oncology.

GILD stock is considered one of the most rewarding investments in the biopharmaceutical industry by long-term investors. Those who bought shares of Gilead stock five years ago have seen their investments increase by 263%.

Gilead Stock: Financial Performance

I believe that Gilead stock is still a winner, although it is experiencing volatility, primarily due to the weak sales performance of “Harvoni”—its leading hepatitis C treatment—in the second quarter of 2016. Harvoni sales dropped to $2.56 billion from $3.61 billion in the same period last year.

Gilead stock’s total revenue in 2Q was $7.8 billion, down from $8.2 billion in the same period a year earlier. GILD stock’s adjusted earnings were $3.08 per share, compared with $3.15 per share in the second quarter of 2015. (Source: “Gilead Sciences Announces Second Quarter 2016 Financial Results,” Gilead Sciences, Inc., July 25, 2016.)

However, Gilead stock’s quarterly results surpassed the $3.02 in earnings per share and $7.77 billion in revenue expected by Wall Street analysts. Over the past four years, Gilead stock has achieved impressive earnings and revenue growth rates of more than 89% and 46%, respectively.

Epclusa Could Be Next Best-Selling Hepatitis C Treatment

Looking at Gilead Sciences’ 2Q financial report, it is important to note that its other products—such as “Sovaldi,” “Truvada,” “Complera/Eviplera,” and “Viread”— posted better sales performances than in the year-ago quarter.

The biopharmaceutical company also reported that “Epclusa,” its first pan-genotypic treatment for chronic hepatitis C, posted $64.0 million of sales in just one week. Gilead Sciences obtained approval for the medicine from the U.S. Food and Drug Administration (FDA) on June 28. (Source: “U.S. Food and Drug Administration Approve Gilead’s Epclusa (Sofosbuvir/Velpatasvir) for the Treatment of All Genotypes of Chronic Hepatitis C,” Gilead Sciences, Inc. June 28, 2016.)

There is a great possibility for Epclusa to become Gilead Sciences’ next best-selling hepatitis C treatment. During the company’s recent earnings call, Chief Operating Officer Kevin Young said Epclusa would be an “important treatment option” in the United States, where 20%-25% of hepatitis C patients have genotype 2 and genotype 3. A similar percentage of patients have genotype 2 and genotype 3 hepatitis C in Europe. Several other countries have 30% of patients with genotype 3 hepatitis C.

Genvoya is Now the Most-Prescribed HIV Regimen

Gilead Sciences’ total revenue from its HIV and other antiviral products in the second quarter increased 11% to $2.2 billion sequentially.

The biopharmaceutical company noted that “Genvoya” was already the most-prescribed single-table regimen for HIV patients since its launching in November last year. (Source: “U.S. Food and Drug Administration Approves Gilead’s Single Tablet Regimen Genvoya (Elvitegravir, Cobicistat, Emtricitabine and Tenofovir Alafenamide) for Treatment of HIV-1 Infection,” Gilead Sciences, Inc., November 5, 2016.)

Genvoya is the preferred regimen in several HIV treatment guidelines, including in Italy. According to Young, 78% of all Genvoya prescription in 2Q came from switches (50% from “Stribild” and 10% from non-Gilead Sciences therapies).

Gilead Sciences also sees a similar patient dynamics for its newly launched “Odefsey” and “Descovy” treatments. More than 90% of all prescriptions for both medicines came from switches. Six percent of Odefsey prescription and 11% of Descovy prescriptions came from non-Gilead therapies. 

The Bottom Line for GILD stock

Gilead Sciences believes that the market for hepatitis C treatments is still attractive, providing solid earnings per share, revenue, and cash flow for the company over the long term. The company estimated that 3.0 million people are infected with hepatitis C virus in the United States. Slightly more than half have been diagnosed, which means the flow of patients seeking treatment will continue over the coming years.

Harvoni and Sovaldi have treated hepatitis C patients at a faster rate than expected. Gilead Sciences is well positioned to compete in the market, given the proven efficacy of its treatments. The biopharmaceutical company’s newly-launched products are promising, and could help drive its long-term growth and profitability.

Additionally, Gilead Sciences has more than 30 clinical studies in its pipeline. Six are in phase 3, including “Bictegravir” for HIV/AIDS, “TAF” for chronic hepatitis B, “Sofosbuvir” for chronic hepatitis C, “Idelalisib” for relapsed refractory CLL, “Momelotinib” for Myelofibrosis, “GS-5475” for gastric cancer, and “Eleclazine” for long QT-3 syndrome. (Source: “Pipeline,” Gilead Sciences, Inc., last accessed October 18, 2016.)

Wall Street analysts have a consensus prediction that Gilead Sciences will continue to beat the market. Seven brokerage firms gave a “buyrating for GILD stock, 11 gave it a “hold” rating, and eight gave it an “outperform” rating.

Over the next 12 months, GILD stock is expected to trade for as much as $135.00 per share, an increase of nearly 86%. The median price target for the stock is $100.00 per share, an upside of more than 37%. The lowest price target is $80.00 per share, which is a gain of 10%. These projections show that Gilead Sciences is winner, and that shareholders are poised to generate significant profits from their investments in the company.