Biopharmaceutical giant Gilead Sciences, Inc. (GILD) discovers, develops, and commercializes medicines in the areas of unmet medical need in the United States, Europe, and worldwide.
The company reported impressive sales for the last quarter and raised its full-year guidance. GILD expects total product sales in 2022 to be between $24.5 billion and $25 billion, compared to its previously projected sales in the range of $23.8 billion to $24.3 billion. In addition, GILD expects adjusted earnings per share between $6.35 and $6.75, up from its previous guidance of $6.20 to $6.70.
"This was a very strong quarter for Gilead, with solid commercial and clinical execution," said Daniel O’Day, Chairman, and Chief Executive Officer, Gilead Sciences. He also said, “There was continued strong demand for our HIV portfolio with further share growth for Biktarvy, and oncology revenues reached an all-time high, driven by cell therapy and Trodelvy."
Here is what could shape GILD’s performance in the near term:
Latest Developments
Last month, GILD, and the European Commission signed a new joint procurement agreement (JPA) that will ensure continued rapid and equitable access to Veklury for participating Member States across the European Union (EU) and European Economic Area (EEA). The agreement covers the acquisition of Veklury over the next twelve months and has the option to be extended for an additional six months.
Robust Financials
For the second quarter ending June 30, 2022, GILD's total product sales, excluding Veklury, increased 7% year-over-year to $5.69 billion. Also, its HIV product sales increased 7% from its year-ago value to $4.23 billion. The company’s oncology sales increased 71% year-over-year to $527 million.
Its non-GAAP operating margin came in at 42.7% versus 49.5% a year ago. The company's non-GAAP EPS came in at $1.58 versus $1.81 a year ago.
Strong Profitability
GILD’s trailing-12-month gross profit margin of 79.5% is 44.8% higher than the industry average of 54.9%. In addition, its trailing-12-month ROE, ROC, and ROA of 20.73%, 19.72%, and 6.58%, respectively, compare to negative industry averages.
Discounted Valuation
The company’s 19.47X forward GAAP P/E is 29.7% lower than its industry average of 27.68x. Also, its 2.8X EV/Sales is 33.9% lower than its industry average of 4.23x. Its 3.08x forward Price/Sales is 39.3% lower than its industry average of 5.06x.
POWR Ratings Reflect Solid Prospects
GILD has an overall A grade, which equates to a Strong Buy in our proprietary POWR Ratings system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
Our proprietary rating system also evaluates each stock based on eight distinct categories. GILD is rated an A grade for Value and a B for Quality. GILD’s lower valuation is in sync with its Value grade. Its higher profitability is consistent with its Quality grade.
Among the 404 stocks in the Biotech industry, GILD is ranked #7.
Beyond what I stated above, we have graded GILD for Stability, Growth, and Momentum. Click here to see more of GILD’s component grades.
Bottom Line
Continued demand for HIV portfolio and higher-than-industry profitability should help the stock perform well. Therefore, we think it could be wise to scoop up the shares at the current discounted valuation.
How does Gilead Sciences, Inc. (GILD) Stack Up Against its Peers?
GILD has an overall POWR Rating of A, which equates to a Strong Buy. Check out these other stocks within the Biotech industry with A (Strong Buy) ratings, such as Vertex Pharmaceuticals Inc. (VRTX), Sino Biopharmaceutical Limited (SBHMY), and Biogen Inc. (BIIB).
GILD shares were trading at $62.76 per share on Wednesday afternoon, up $0.76 (+1.23%). Year-to-date, GILD has declined -11.37%, versus a -11.19% rise in the benchmark S&P 500 index during the same period.
About the Author: Spandan Khandelwal
Spandan's is a financial journalist and investment analyst focused on the stock market. With her ability to interpret financial data, she aims to help investors evaluate the fundamentals of a company before investing.
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