Healthcare company Gilead Sciences, Inc. (GILD) benefited significantly during the pandemic as it developed the first antiviral drug approved to treat COVID-19. However, with declining covid cases, GILD’s popular covid product Veklury’s (Remdisivir) sales decreased 51.9% year-over-year to $925 million for the third quarter ended September 2022.

However, GILD beat consensus revenue and EPS estimates for the quarter. Analysts expected GILD’s revenue and EPS to come in at $6.13 billion and $1.43. GILD surpassed forecasts by 14.8% and 32.9%, respectively.

Additionally, according to GILD’s Chairman and CEO, Daniel O’Day, “In oncology, there is increasing demand for cell therapies and Trodelvy. Yescarta and Tecartus received two approvals in Europe and Trodelvy was granted FDA Priority Review for HR+/HER2- metastatic breast cancer.”

Trodelvy’s sales increased 78.2% year-over-year to $180 million for the 2022 third quarter. Moreover, the company’s Vemlidy® (tenofovir alafenamide) 25 mg tablets got approved by the U.S. Food and Drug Administration as a once-daily treatment for chronic hepatitis B virus infection, which is yet another milestone achievement for GILD.

The company is continuously investing in medicine and research, which is expected to boost its position in the industry.

GILD has gained 24.6% over the past month to close the last trading session at $81.82. It has gained 12.7% year-to-date and 21.3% over the past year. Moreover, the stock is trading above its 50-day and 200-day moving averages of $68.68 and $63.59, respectively.

Here is what could shape GILD’s performance in the near term:

Top-line Growth, Excluding Veklury (Remdisivir)

GILD’s HIV-segment sales came in at $4.49 billion for the third quarter that ended September 30, 2022, up 7.1% year-over-year. Its HCV-segment sales came in at $524 million, up 22.1% year-over-year.

Moreover, its Cell Therapy segment sales came in at $398 million, up 79.3% year-over-year. Its total sales, excluding Veklury, increased 11.4% year-over-year to $6.05 billion. In addition, its cash and cash equivalents came in at $4.70 billion, up 7.7% year-over-year.

Attractive Valuation

GILD’s forward EV/EBITDA of 8.58x is 35.9% lower than the industry average of 13.39x. Its forward Price/Sales of 3.87x is 10% lower than the industry average of 4.30x. Also, its forward Price/Cash Flow of 10.50x is 40.7% lower than the industry average of 17.71x.

Robust Profitability

GILD’s trailing-12-month gross profit margin of 79.22% is 45.9% higher than the industry average of 54.31%. Its trailing-12-month EBITDA margin of 47.08% is substantially higher than the industry average of 3.04%, while its trailing-12-month net income margin of 12.29% is higher than the negative industry average of 5.84%.

Furthermore, its trailing-12-month ROCE, ROTC, and ROTA of 15.67%, 13.97%, and 5.33% compared with the industry averages of negative 38.67%, 21.39%, and 30.70%, respectively.

POWR Ratings Reflect Promising Outlook

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

GILD has an A grade for Value, consistent with its lower-than-the-industry valuation multiples. It has a B grade for Quality, in sync with its higher-than-industry profitability margins.

In the 380-stock Biotech industry, GILD is ranked #3.

Click here for the additional POWR Ratings for GILD (Growth, Momentum, Stability, Sentiment).

View all the top stocks in the Biotech industry here.

Bottom Line

GILD has been a major beneficiary of Covid-19. Although its pandemic-led sales are slowing, the company’s lucrative investments in developing treatments for various ailments should help it grow.

Moreover, GILD’s dividend payouts have increased at a 7.4% CAGR over the past five years and a 5.6% CAGR over the past three years. Its current dividend yield is 3.57%, while its four-year average yield is 4.00%. Thus, I think GILD might be worth adding to your portfolio.

How Does Gilead Sciences, Inc. (GILD) Stack up Against Its Peers?

While GILD has an overall POWR Rating of A, one might consider looking at its industry peers, Vertex Pharmaceuticals Incorporated (VRTX), United Therapeutics Corporation (UTHR), and Biogen Inc. (BIIB), which also have an overall A (Strong Buy) rating.

GILD shares were trading at $83.48 per share on Monday morning, up $1.66 (+2.03%). Year-to-date, GILD has gained 19.23%, versus a -15.15% rise in the benchmark S&P 500 index during the same period.

About the Author: Riddhima Chakraborty

Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries. More...

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