Company Overview: Gilead Sciences, Inc. (NASDAQ: GILD) is a research-based biopharmaceutical company. Its portfolio of products and pipeline of investigational drugs includes treatments for Human Immunodeficiency Virus/Acquired Immune Deficiency Syndrome (HIV/AIDS), liver diseases, cancer, inflammatory and respiratory diseases, and cardiovascular ailments. It also offers Veklury (remdesivir), an intravenous injection, is used to treat COVID-19 in adults and children 12 years of age and older who are hospitalized or (ii) not hospitalized and have mild-to-moderate COVID-19 and are at high risk of progression to severe COVID-19, including hospitalization or death. GILD has a global presence in over 35 countries, with headquarters in Foster City, California.
Key Takeaways from FY21 (ended December 31, 2021)
Revenues & Operating Profit Key Highlights; Analysis by Kalkine Group
Other Key Findings in FY21
Balance Sheet & Liquidity Position
Key Metrics: In FY21, GILD's operating and net margins were 36.3% and 22.7%, compared to the industry median of -162.9% and -104.6%, respectively. ROE stood at 31.7%, 5,870 bps more than the industry median.
Profitability Metrics and Leverage Profile; Analysis by Kalkine Group
Top 10 Shareholders: The top 10 shareholders together form around 40.99% of the total shareholding, while the top 4 constitute the maximum holding. Capital Research Global Investors and The Vanguard Group, Inc., hold the maximum stake in the company at 8.55% and 8.44%, respectively, as also highlighted in the chart below:
Top 10 Shareholders; Analysis by Kalkine Group
Valuation Methodology: Price/Earnings Per Share Multiple Based Relative Valuation (Illustrative)
Source: Analysis by Kalkine Group
*% Premium/(Discount) is based on our assessment of the company's FY1 trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.
Stock Recommendation: Over the past three months, GILD's share price has corrected 18.75%. The stock is currently leaning towards the lower end of its 52-week range of USD 57.19 to USD 74.12. We have valued the stock using the Price/Earnings multiple-based illustrative relative valuation method and arrived at a target price with an upside of mid-twenties (in percentage terms). We believe that the company is trading at a premium with its peer's average, considering its improving leverage profile, solid bottom-line performance, a surge in demand for Veklury, etc. We have taken peers like Moderna, Inc. (NASDAQ: MRNA) and AbbVie Inc. (NYSE: ABBV). Considering the strong fundamentals, robust margins, increasing dividend yield, positive outlook, associated risks, and current valuation, we give a "Buy" recommendation on the stock at the closing price of USD 58.85, down 1.88% as of March 23, 2022.
GILD Technical Chart, Data Source: REFINITIV, Analysis by Kalkine Group
Note 1: The reference data in this report has been partly sourced from REFINITIV.
Note 2: Investment decision should be made depending on the investors' appetite for upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the valuation has been achieved and subject to the factors discussed above.
Technical Indicators Defined
Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.
Resistance: A level where-in the stock prices tend to find resistance when they are rising, and the uptrend may take a pause due to profit booking or selling interest.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
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