We believe Gilead Sciences (NASDAQ
However, the titer has been corrected significantly to account for the potential revenue loss of Filgotinib as well as other factors discussed above. We believe GILD stock now looks attractive at current levels of around $ 65, due to multiple factors.
- At the current price of $ 65, the GILD stock is actually trading at levels below its pre-Covid highs, while the larger S & P500 index has risen 87% over the same time frame.
- It’s not that GILD only had one successful drug in its pipeline that it relied on for future sales. The company has a strong pipeline with 16 programs in advanced clinical trials and 51 programs in early trials, some of which have the potential to become successful drugs.
- The company’s best-selling drug is Biktarvy, with sales of $ 7.3 billion in 2020, up from $ 4.7 billion in 2019 and $ 1.2 billion in 2018. Biktarvy is used for the treatment of HIV, and its patent is protected until 2033, implying that Gilead may see sales of this drug over the next few years.
- The company has great potential in oncology drugs, thanks to its acquisition of Immunomedics in 2020.
- Finally, looking at the valuation, at the current price of $ 65, the GILD stock is trading at just 9 times its expected EPS of $ 7.17 for 2021. The figure of 9x is well below that of its peers, such as AMGN and BIIB trading at 15x, and PFE trading at 11x its forward earnings.
While the GILD share has been volatile in the current Covid-19 crisis, how has it behaved during the 2008 crisis? In this note, we focus on a comparative analysis of Gilead Science’s performance during the current financial crisis versus the 2008 recession in our interactive dashboard.
Chronology of the coronovirus crisis so far:
- 12/12/2019: Coronavirus cases first reported in China
- 01/31/2020: WHO declares global health emergency.
- 02/19/2020: Signs of effective containment in China and hopes of monetary easing from major central banks are helping the S&P 500 reach record high.
- 03/23/2020: S&P 500 34% drop from the peak level seen on February 19, 2020, as COVID-19 cases accelerate outside China. It doesn’t help that oil prices collapse in mid-March amid a Saudi-led price war
- Since 03/24/2020: S&P 500 recovers 87% since the lows seen on March 23, 2020, as the Fed’s multibillion-dollar stimulus package removes short-term survival anxiety and injects liquidity into the system.
- 04/27/2021: About 43% of the US population has received at least one dose of Covid-19 vaccine, 29% of the population is fully vaccinated.
On the other hand, here is how the GILD share and the market in general behaved during the crisis of 2007-08
Timeline of the 2007-08 crisis
- 1/10/2007: Approximate pre-crisis peak of the S&P 500 index
- 9/1/2008 – 10/1/2008: Accelerated decline in the market corresponding to Lehman’s bankruptcy filing (09/15/08)
- 03/01/2009: Approximate low of the S&P 500 index
- 12/31/2009: Initial recovery to levels before accelerated decline (around 09/01/2008)
Performance of the GILD and S&P 500 during the 2007-08 financial crisis
GILD stock rose from levels of around $ 21 in October 2007 (pre-crisis peak for larger markets) to levels of around $ 25 in September 2008 before falling to $ 22 in March 2009 ( as markets bottomed), implying that GILD stock did indeed rise 7% from its October 2007 levels. It remained at around $ 22 at the end of 2009. By comparison, the The S&P 500 index fell 51% from its peak in September 2007 to its lowest in March 2009, followed by a strong recovery of 48% in January 2010.
GILD’s fundamentals have been solid over the past few years
Gilead’s revenue grew from $ 22.1 billion in 2018 to $ 24.7 billion in 2020, thanks to an increased contribution from Biktarvy. While on a GAAP basis, the company’s EPS fell from $ 4.20 to $ 0.10 during the same period, on a non-GAAP basis, EPS actually fell from $ 6.67 in 2018 to $ 7.09 in 2020. GAAP 2020 figures have been impacted by an increase in the ongoing process. R&D costs, absence of tax benefits noted in 2019 and costs related to acquisitions.
Does GILD have sufficient cash cushion to meet its obligations?
Gilead saw its total debt drop from $ 27.3 billion in 2018 to $ 31.4 billion in 2020, in part due to the acquisition of Immunomedics in 2020, while its total cash flow increased from 31, $ 5 billion to $ 7.9 billion over the same period. It also generated more than $ 8 billion in cash for its operations in 2020. The company has sufficient cash cushion to meet its short-term obligations.
Phases of the Covid-19 crisis:
- From early to mid-March 2020: Fear of the rapidly spreading coronavirus epidemic results in reality, with an acceleration in the number of cases worldwide
- End of March 2020 and beyond: social distancing measures + lockdowns
- April 2020: Nourished stimulation suppresses short-term survival anxiety
- May-June 2020: Resumption of demand, with progressive lifting of locks – no more panic despite a steady increase in the number of cases
- July-October 2020: After poor Q2 results, Q3 expectations were lukewarm, but continued improvement in demand, and advances in vaccine development have fueled the growth of stock market indices.
- Early 2021: Several countries approved vaccines against Covid-19, further boosting market sentiment, although new variants of the coronavirus have led to an increase in active cases in several countries.
As the global economy opens up and restrictions are lifted in stages, the overall volume of new patient departures will increase, which bodes well for GILD action in the near term. We believe that GILD stock could climb back to levels above $ 80, which implies a rise of around 24% from the current price.
While the GILD stock may see a rebound, it’s helpful to see how its peers stack up. Check out Regeneron Peer Comparisons to see how the REGN stock compares to its peers on metrics that matter. You may find other useful comparisons on peer-to-peer comparisons.
See everything Trefis price estimates and Download Trefis data here
What is behind Trefis? Find out how it fuels a new collaboration and why Financial directors and finance teams | Product, R&D and marketing teams