Nasdaq components Gilead Sciences, Inc. (GILD), Vertex Pharmaceuticals Incorporated (VRTX), and Autodesk, Inc.’s (ADSK) ever-improving performance could translate into impressive returns in the long run. In this piece, I have discussed several reasons I am bullish on these stocks despite the current uncertainties.
Ever since the increased borrowing costs resulting from the Federal Reserve’s interest rate hikes caught regional banks in the U.S. off guard and wrong-footed, regulators have been scrambling to salvage the money of unfortunate depositors paying a hefty price for keeping their faith in the system and whatever of it is still remaining.
While the regulators and the bankers bailing out their peers on both sides of the Atlantic are hoping that it would be enough to manage and mitigate potential contagion risks, the Central Bank might not share similar wishful thinking about its fight against inflation. Despite the ongoing turmoil, the Fed is likely to hike interest rates by another 25 bps, which might push the market into another bout of volatility.
Since the markets and the economy don’t look like they are going to catch a break anytime soon, it could be wise to use the opportunity to load up on stocks of fundamentally strong and resilient businesses that could keep delivering risk-adjusted returns over the long run.
Let’s take a closer look at the featured stocks.
Gilead Sciences, Inc. (GILD)
As a biopharmaceutical company, GILD primarily develops and commercializes medicine to prevent and treat diseases like HIV, viral hepatitis, and cancer.
On February 22, GILD’s subsidiary, Kite, announced the completion of its previously announced transaction to acquire Tmunity Therapeutics (Tmunity), a clinical-stage, private biotech company focused on next-generation CAR T-therapies and technologies.
The acquisition would complement Kite’s existing in-house cell therapy research capabilities by adding additional pipeline assets, platform capabilities, and a strategic research and licensing agreement with the University of Pennsylvania (Penn).
On January 3, GILD and EVOQ Therapeutics, Inc. announced a collaboration and licensing agreement. Under the agreement, GILD would receive the rights to exclusively license EVOQ’s NanoDisc technology to develop and commercialize EVOQ’s proprietary technology for treating rheumatoid arthritis (RA) and lupus.
On December 27, 2022, GILD and Jounce Therapeutics, Inc. (JNCE) amended their existing license agreement for GS-1811 (formerly JTX-1811). This amendment would enable GILD to acquire all remaining rights to potential first-in-class Immunotherapy GS-1811 from JNCE as a potential treatment for solid tumors.
For the fourth quarter of fiscal 2022, which ended December 31, GILD’s total revenues increased 2% year-over-year to $7.39 billion, driven by increased sales in Oncology, HIV, and hepatitis C virus (HCV), partially offset by lower Veklury (remdesivir) sales.
During the same period, GILD’s non-GAAP operating income increased 79.1% year-over-year to $2.70 billion, while the non-GAAP net income attributable to GILD increased 143.2% year-over-year to $2.11 billion. As a result, the company’s quarterly non-GAAP EPS increased 142% year-over-year to $1.67.
Analysts expect GILD’s revenue and EPS for the fiscal ending December 2024 to come in at $27.23 billion and $7.22, representing increases of 2% and 5.8% year-over-year, respectively. Revenue and EPS are expected to increase by a further 3.1% and 2.9% year-over-year in the next fiscal year to $28.06 billion and $7.43, respectively.
GILD has an impressive earnings surprise history of surpassing the consensus EPS estimates in each of the trailing four quarters. The stock has gained 17.5% over the past six months and 30.6% over the past year to close the last trading session at $77.31.
GILD’s fundamental strength and solid prospects are reflected in its overall rating of A, translating to a Strong Buy in our POWR Ratings system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
GILD also has an A grade for Growth and Value and a B for Sentiment and Quality.
Unsurprisingly, GILD tops the list of 384 stocks in the Biotech industry. Click here for additional ratings for GILD’s Momentum and Stability.
Vertex Pharmaceuticals Incorporated (VRTX)
As a global biotechnology company, VRTX develops and commercializes medicines to treat the underlying cause of cystic fibrosis (CF).
On March 9, VRTX announced that it received clearance from the U.S. Food and Drug Administration (FDA) for the Investigational New Drug Application (IND) for VX-264 to treat type 1 diabetes (T1D). Since this application doesn’t require the use of immunosuppression, it could reach a broader population of people with T1D.
On December 12, 2022, VRTX announced that the FDA had cleared its IND application for VX-522, a messenger ribonucleic acid (mRNA) therapy for people with CF. This is an important milestone in the company’s partnership with Moderna, Inc. (MRNA), which began more than 5-years ago.
On December 8, VRTX announced its global collaboration with Entrada Therapeutics, Inc. (TRDA) to focus on discovering and developing intracellular Endosomal Escape Vehicle (EEV) therapeutics for myotonic dystrophy type 1 (DM1).
Under the terms of the agreement, TRDA will receive an upfront payment of $224 million and an equity investment of $26 million. It is eligible to receive up to $485 million for the achievement of certain research, development, regulatory, and commercial milestones and tiered royalties on future net sales for any products that may result from this collaboration agreement.
During the fiscal year that ended December 31, 2022, VRTX’s net product revenues increased 17.9% year-over-year to $8.93 billion, primarily driven by the rapid uptake of TRIKAFTA/KAFTRIO in multiple countries internationally and the continued performance of TRIKAFTA in the U.S.
During the same period, the company’s non-GAAP operating income increased 48.3% year-over-year to $4.79 billion, while its non-GAAP net income increased 53.4% year-over-year to $3.86 billion. This translated to a non-GAAP net income of $14.88 per diluted share, up 53.9% year-over-year.
Analysts expect VRTX’s revenue and EPS for the fiscal ending December 2024 to come in at $10.40 billion and $15.79, representing increases of 7.1% and 9.1% year-over-year, respectively. Revenue and EPS are expected to increase by 7.3% and 10.8% year-over-year in the next fiscal year to $11.15 billion and $17.50, respectively.
VRTX has an impressive earnings surprise history of surpassing the consensus EPS estimates in three of the trailing four quarters. The stock has gained 3.7% over the past six months and 18.3% over the past year to close the last trading session at $295.77.
VRTX’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which indicates a Strong Buy in our proprietary rating system. It also has an A grade for Quality and a B for Value and Sentiment.
VRTX is ranked #3 of 384 stocks in the Biotech industry. Click here for the additional POWR Ratings for Growth, Momentum, and Stability for VRTX.
Autodesk, Inc. (ADSK)
ADSK is a three-dimensional (3D) design, engineering, and entertainment software and services provider. The company’s offerings cater to four primary product families: architecture, engineering, and construction (AEC); AutoCAD and AutoCAD LT; manufacturing (MFG); and media and entertainment (M&E).
During the fourth quarter of the fiscal year that ended January 31, 2023, ADSK’s total net revenue and gross profit increased 14% year-over-year to $5.01 billion and $4.53 billion, respectively. During the same period, the company’s non-GAAP income from operations and net profit increased 27.8% and 65.6% year-over-year to $1.79 billion and $823 million, respectively.
As a result, ADSK’s non-GAAP net income per share increased 30.8% year-over-year to $6.63.
Analysts expect ADSK’s revenue and EPS for the fiscal year ending January 31, 2023, to increase 8.3% and 9.2% year-over-year to $5.42 billion and $7.24, respectively. Both metrics are expected to keep growing over the next two fiscals to reach $6.69 billion and $9.58, respectively.
With an impressive earnings surprise history, ADSK has met or surpassed consensus EPS estimates in each of the trailing four quarters. The stock has gained 1.1% over the past six months to close the last trading session at $199.11.
ADSK has an overall rating of B, which translates to Buy in our POWR Ratings system. It has an A grade for Quality and a B for Growth.
ADSK is ranked #10 of 133 stocks in the Software – Application industry. Click here to see the additional POWR Ratings for ADSK’s Stability, Value, Momentum, and Sentiment.
Consider This Before Placing Your Next Trade…
We are still in the midst of a bear market.
Yes, some special stocks may go up like the ones discussed in this article. But most will tumble as the bear market claws ever lower this year.
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GILD shares were trading at $79.18 per share on Monday afternoon, up $1.87 (+2.42%). Year-to-date, GILD has declined -6.89%, versus a 2.75% rise in the benchmark S&P 500 index during the same period.
About the Author: Santanu Roy
Having been fascinated by the traditional and evolving factors that affect investment decisions, Santanu decided to pursue a career as an investment analyst. Prior to his switch to investment research, he was a process associate at Cognizant. With a master's degree in business administration and a fundamental approach to analyzing businesses, he aims to help retail investors identify the best long-term investment opportunities.
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