Despite a nearly 21% drop in revenue from last year, Gilead Sciences (NASDAQ: GILD) reported earnings that beat consensus estimates. The stock, which is already up from its low of $65, could continue on its rebound on the markets.
The sales decline did not send GILD stock lower because the market already expected this. But the earnings results, plus the announcement of a CEO change, brings some hope to long-time investors. The leadership change is fitting as the company moves to the next phase of its growth cycle.
Gilead made as much as it could for its HIV and hepatitis drugs. The new leadership brings promise of change at the company.
Gilead has around $24 per share in cash. Backing that out would net a cost of around $50 a share for investors. At an EPS of at least $6 a share, GILD stock costs just 8.3 times earnings. But to grow at a pace faster than the market invests, the company must buyout companies that have promising drugs in the pipeline.
Analysts, on average, have a ~$88 price target, or a 12 percent upside, on GILD stock (according to Tipranks).
Takeaway
Gilead is on solid footing for the future. Its core business is supported by growth in the HIV business. Investors holding GILD stock may look forward to the launch of Biktarvy in the U.S., the growth in its cell therapy business, and exposure to the emerging R&D areas of NASH and inflammation.
Gilead stock traded recently at around $78.
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