Gilead Sciences Inc.

Gilead Sciences Inc. (NASDAQ - GILD) is a biopharmaceutical firm. The company's primary emphasis is on the research, production, and sale of pharmaceuticals to protect and cure ailments such as HIV, viral hepatitis, and cancer. Through the distribution channels, it sells and distributes its products in the United States and more than 35 countries across the world.

Latest news

• Quarterly Financial results announcement: Gilead sciences Inc. has announced its Q1 2022 results on 28 April 2022. After the announcement, the share price of GILD closed at USD 59.34, down 3.61% as of 29^th April 2022.
• FDA approval of the new drug for pediatric patients: On April 25, 2022, Gilead Sciences, Inc. reported that the US FDA has granted a supplementary new drug application for Veklury, making it the solely authorized medicine for the treatment of pediatric patients with Covid-19 who are 12 years old or younger.
• Big donation to help end the HIV epidemic: On March 28, 2022, Gilead Sciences, Company stated a USD24 million contribution to assist in minimizing health inequalities, enhancing access to excellent healthcare, expanding medical education, and empowering the community most affected by the HIV epidemic and COVID-19 pandemic. The initiative Zeroing In: Ending the HIV Epidemic will help 116 organizations in 41 countries.

Q1 FY22 financial results

• Revenue grew 3% to USD6.6 billion in Q1 of 2022 compared to the same time in 2021, owing to higher sales for Biktarvy and Veklury, largely offset by the loss of Truvada exclusivity in the United States and adverse pricing prospects for hepatitis C virus medications.
• In the first quarter of 2022, diluted earnings per share fell to USD0.02 from USD1.37 in the same period of 2021. A USD2.7 billion in-process R&D impairment attributable to assets bought by Gilead from Immunomedics in 2020 was the primary cause of the decline. Non-GAAP diluted EPS climbed by 4% to USD2.12 in the first quarter of 2022, compared to USD2.04 in the same quarter of 2021, owing to stronger sales revenue.
• Gilead had USD6.8 billion in cash, cash equivalents, and marketable debt instruments as of March 31, 2022, compared to USD7.8 billion as of December 31, 2021. Gilead also paid Arcus Biosciences, Inc. a USD725 million collaborative opt-in payment, reimbursed USD500 million in debt, issued USD945 million in dividends, and bought back USD352 million in common stock.
• Finally, Gilead achieved USD1.8 billion in operational cash flow in Q1, 2022, which included the cash outflow associated with the USD1.25 billion litigation payment.

Key Risks

• Foreign exchange risk: Because on an average around 25% of GILD's income comes from outside the United States, it is regularly exposed to volatility in foreign currency exchange rates. As a result, any negative movement in the currency rate would be detrimental to the company's bottom line, particularly given the recent strengthening of the US dollar.
• Failure to receive positive lab trial results: Biopharmaceutical businesses invest billions of dollars each year in research and development. There is always the possibility that any of these research findings may be a failure, resulting in significant losses.

Outlook

GILD has adjusted its EPS outlook for the full year to include the USD2.7 billion IPR&D impairment. EPS will now be between USD3.00 and USD3.50, down from USD4.70 to USD5.20 earlier. Product sales are estimated to range between USD23.8 billion and USD24.3 billion in FY22. While the pandemic is projected to continue to have an influence on Gilead's operations and overall market fundamentals, the pace and intensity of these effects, as well as the recovery from the pandemic, may differ throughout the company.

Technical Analysis

Price has been in a bearish cycle since starting of FY22. On 30^th December 2021, the price was at USD 74.12 and since then has correct 18.94% to currently at USD 59.34 as of 29^th April 2022. Price has taken support from a strong support range around USD 57 – 58. If the price remains above this support range for a couple of upcoming weeks, then a strong bullish cycle can start for GLD stock. Price is currently close to the lower side of the 52-week range of USD 57 to USD 72.

One-year technical Price Chart (as of 29 April 2022). Analysis by Kalkine Group

Valuation Methodology – Price/Earnings Per Share Multiple Based Relative Valuation

Stock Recommendation

GILD stock price has fallen about 18.94% since the start of FY22 and is currently around very strong support of USD 57 which has not been broken since 2013. We have valued the stock using the Price/Earnings Per share relative valuation methodology and arrived at a target price of USD 82.29.

Considering the correction in the stock price, strong financial results, solid topline performance, positive outlook, associated risks, technical analysis, and current valuation. We recommend a "Buy" rating on the stock at the current price of USD 59.24, as of April 29, 2022.

Technical Analysis Summary

*Current price as of April 29, 2022.

Investors can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario. 

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and a 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 unfavorable movement in the stock prices.

Note 1: The reference data in this report has been partly sourced from REFINITIV.  

Note 2: Investment decisions should be made depending on the investors' appetite for upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting the stock if the Target Price mentioned as per the valuation has been achieved and subject to the factors discussed above. 

Note 3: The report publishing date is as per the Pacific Time Zone.