With a $79.93 billion market cap, Gilead Sciences, Inc. (GILD) operates as a biopharmaceutical company that discovers, develops, and commercializes medicines for unmet medical needs in the United States, Europe, and internationally.

The company reported strong financials in the fiscal 2022 second quarter with solid commercial and clinical execution. During the quarter, its total product sales, excluding Veklury, improved 7% year-over-year to $5.70 billion, primarily due to growth in the HIV, Cell Therapy, and Trodelvy® businesses.

On September 21, 2022, GILD completed the acquisition of MicroBio, a privately held U.K.-based biotechnology company focused on restoring immune balance with agonists targeting immune inhibitory receptors. With this acquisition, the company will access MicroBio’s proprietary discovery platform and complete a portfolio of immune inhibitory receptor agnostics.

Earlier this month, GILD’s company, Kite, announced that the European Commission (EC) approved CAR T-cell therapy Tecartus® for treating relapsed or refractory acute lymphoblastic leukemia. This approval marks Kite’s fourth indication in Europe for its two cell therapies and first in Leukemia.

Furthermore, last month, GILD announced the first global regulatory approval of Sunlenca® (lenacapavir) injection and tablets for treating HIV infection. The European Commission granted marketing authorization for Sunlenca, which will help to address the critical unmet clinical need for people with multi-drug-resistant HIV who have limited treatment choices.

The stock has gained 6.3% over the past six months to close the last trading session at $63.77.

Here is what could influence GILD’s performance in the upcoming months:

Robust Financials

For the fiscal 2022 second quarter ended June 30, 2022, GILD’s total product sales, excluding Veklury, increased 7% year-over-year to $5.69 billion. The company’s HIV product sales increased 7% from its year-ago value to $4.23 billion. The company’s oncology sales increased 71% from the prior-year quarter to $527 million.

Improved Guidance

GILD raised its full-year guidance. The company now expects total product sales between $24.50 billion and $25 billion, compared to its previously forecasted sales of $23.80 billion to $24.30 billion. Its total product sales, excluding Veklury, are expected to come between 22 billion and 22.50 billion, compared to the previous forecasted $21.80 billion and $22.30 billion.

In addition, GILD expects total Veklury sales of approximately $2.50 billion, up from prior guidance of $2 billion. The company expects non-GAAP earnings per share between $6.35 and $6.75, compared to its previous guidance of $6.20 to $6.70.

Attractive Valuation

In terms of forward non-GAAP P/E, GILD is currently trading at 9.62x, 47.2% lower than the industry average of 18.24x. The stock’s forward EV/EBITDA of 7.50x is 43.1% lower than the industry average of 13.18x. Likewise, its forward EV/EBIT of 8.68x is 47.4% lower than the industry average of 16.49x.

Furthermore, the stock’s forward Price/Sales of 3.17x is 26.5% lower than the industry average of 4.32x. Also, its forward Price/Cash Flow multiple of 8.11 is 49.2% lower than the industry average of 15.95.

High Profitability

GILD’s trailing-12-months gross profit margin of 79.50% is 46.4% higher than the industry average of 54.31%. The stock’s trailing-12-month EBIT margin of 40.36% compares to the industry average of 0.18%. In addition, its trailing-12-month EBITDA margin of 48.02% is 1,143% higher than the 3.86% industry average.

Also, the stock’s ROCE, ROTC, and ROTA of 20.72%, 14.41%, and 6.58% compare to the negative industry averages of 38.46%, 21.31%, and 29.59%. Its trailing-12-month asset turnover ratio of 0.42% is 22.8% higher than the 0.34% industry average.

POWR Ratings Show Promise

GILD’s overall B rating equates to a Buy in our POWR Ratings system. The POWR Ratings are calculated by accounting for 118 distinct factors, with each factor weighted to an optimal degree. 

Our proprietary rating system also evaluates each stock based on eight distinct categories. The stock has a grade of A for Value, consistent with its lower-than-industry valuation metrics. In addition, it has a B grade for Quality, in sync with its higher-than-industry profitability metrics.

GILD is ranked #10 out of 396 stocks in the Biotech industry.

Beyond what I have stated above, we have also given GILD grades for Sentiment, Growth, Momentum, and Stability. Get access to all GILD ratings here.

Bottom Line

GILD reported impressive second-quarter results and affirmed strong performance for the full-year 2022. Moreover, the company is well-positioned to benefit from its diversified product portfolio.

Given GILD’s strong financials, solid growth prospects, high profitability, and discounted valuations, we think it could be wise to add this stock to your portfolio.

How Does Gilead Sciences, Inc. (GILD) Stack Up Against its Peers?

GILD has an overall POWR Rating of B. One could also check out these other stocks within the Biotech industry with an A (Strong Buy) rating: Vertex Pharmaceuticals Inc. (VRTX), Biogen Inc. (BIIB), and Incyte Corporation (INCY).

GILD shares were trading at $63.41 per share on Friday morning, down $0.36 (-0.56%). Year-to-date, GILD has declined -9.44%, versus a -21.25% rise in the benchmark S&P 500 index during the same period.

Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet’s looks to help retail investors understand the underlying factors before making investment decisions.

More...