Up over 19% in 2022, is Gilead Sciences still a buy?

Gilead Sciences (GILD) beat revenue and profit estimates in the prior quarter and revised its guidance for fiscal 2022. After growing more than 19% year-to-date, GILD is it still a buy? Read on for our perspective.

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The stock market has experienced a downturn this year due to various macroeconomic and geopolitical headwinds. The main stock indices are about to end the year with losses. However, healthcare giant Gilead Sciences, Inc. (GILD) has seen positive returns this year. GILD has gained 19.5% in price year-to-date and 20% over the past year to close the latest trading session at $86.42.

GILD gained traction during the pandemic by developing the first antiviral drug approved to treat COVID-19. GILD's revenue and EPS last quarter were above analysts' estimates. Its EPS is 32.9% above the consensus estimate, while its revenue exceeded analysts' estimates by 14.8%.

Daniel O'Day, President and CEO of GILD, said, "This was another very strong quarter for the company as a whole. In HIV, the treatment and prevention markets continue to grow with further market share gains for Biktarvy in treatment, and we received our first approval for our long-acting anti-HIV agent, lenacapavir, in Europe.”

“In oncology, the demand for cell therapies is increasing. Trodelvy, Yescarta and Tecartus have received two approvals in Europe, and Trodelvy has obtained priority review from the FDA for HR+/HER2- metastatic breast cancer. Overall, we are seeing tremendous progress from a commercial and clinical perspective and we look forward to building on this momentum." Lenacapavir holds promise for GILD as it has the potential to generate significant income.

The company raised its guidance for fiscal 2022. It now expects total product sales to be between $25.90 billion and $26.20 billion, up from the previously forecast range of 24. $50 billion to $25 billion. Its non-GAAP EPS is expected to be between $6.95 and $7.15, versus $6.35 to $6.75 previously forecast.

The company is expected to pay a quarterly dividend of $0.73 on December 29, 2022. Its annual dividend of $2.92 earns 3.37% on the current share price. It has an average four-year return of 4%. Its dividend payouts have grown at a CAGR of 5% over the past three years and at a CAGR of 7% over the past five years.

Here's what could influence GILD's performance in the coming months:

Strategic Acquisition

On September 20, 2022, GILD announced the completion of the acquisition of UK biotechnology company MiroBio. The acquisition provides GILD with MiroBio's proprietary discovery platform and its entire portfolio of immune inhibitory receptor agonists.

GILD's Executive Vice President of Research Flavius ​​Martin said, "Inflammation is a key focus area for Gilead, and the technology and pipeline of MiroBio's new discovery platform offer the opportunity to develop potentially best-in-class large molecule therapies to help patients. with currently unmet medical needs."

Strong finances

GILD's HIV product sales increased 7% year-over-year to $4.49 billion for the third quarter ended September 30, 2022. Its total product sales, excluding Veklury , rose 11% year-on-year to $6.05 billion. Additionally, its oncology sales increased 79% from the prior year period to $578 million.

Updated assessment

GILD's forward non-GAAP PER of 12.21x is 37% below the industry average of 19.39x. Its forward EV/EBITDA of 9.15x is 30.4% below the industry average of 13.16x. Additionally, the stock's forward P/S of 4.10x is 2.1% below the industry average of 4.19x.

High profitability

In terms of gross profit margin over the last 12 months, GILD's 79.22% is 44% higher than the industry average of 55.03%. Likewise, its trailing 12-month EBITDA margin of 47.08% is well above the industry average of 3.73%. Additionally, the stock's trailing 12-month asset turnover rate of 0.42% is 22.4% higher than the industry average of 0.34%.

POWR ratings are promising

GILD has an overall rating of A, which equates to a Strong Buy in our POWR rating system. POWR ratings are calculated by considering 118 different factors, each weighted to an optimal degree.

Our proprietary scoring system also rates each stock against eight distinct categories. GILD has an A rating for value, in sync with its updated valuation.