Gilead Sciences announced better-than-expected earnings Wednesday, pushing shares higher. The results were driven by the launch of its new hepatitis C drug Sovaldi, which costs a staggering $1,000 per pill and generated $2.3 billion dollars last quarter.
"Sovaldi's profile has the potential to transform the treatment of hepatitis C. I couldn't be more proud of the teams at Gilead who rapidly brought this product to market," Gilead CEO John Martin said during the company's earnings conference call.
Despite a banner quarter for profits, Gilead's stock is relatively flat on the year. So, is Gilead the right prescription for your portfolio?
"Clearly what Gilead has demonstrated is the strongest launch in pharmaceutical history," said Michael Yee of RBC Capital Markets.
Yee's firm has a price target of $96 per share on Gilead, more than 20 percent higher than current levels.
"The stock clearly is cheap on this year's earnings and next year's earnings," Yee said. "This company might earn 8 to 10 bucks a share next year. That makes the stock trading at an 8 to 10 P/E multiple. Significant discount to the market, significant discount to the peer group, yet the company is growing earnings up to 50 percent."
JC O'Hara of FBN Securities agreed with Yee on the long-term technicals, but he warned that the short-term charts don't look as healthy, pointing out a critical level of resistance on the chart. "We're bumping our head against that critical level of $76. We can't get above it," O'Hara said. "Before we head higher, I think we need to head a little lower to entice people to buy the stock."
What to make of Gilead? Check out the video for the full discussion.
RBC Capital Markets has a price target on GILD of $96 per share
A member company of RBC Capital Markets or one of its affiliates received compensation for investment banking services from Gilead Sciences, Inc. in the past 12 months.
A member company of RBC Capital Markets or one of its affiliates managed or co-managed a public offering of securities for Gilead Sciences, Inc. in the past 12 months.
RBC Capital Markets is currently providing Gilead Sciences, Inc. with non-securities services.
RBC Capital Markets has provided Gilead Sciences, Inc. with investment banking services in the past 12 months.
RBC Capital Markets has provided Gilead Sciences, Inc. with non-securities services in the past 12 months.