GILD - Embedded Expectations Analysis - 2018 11 20
Gilead Sciences, Inc. (GILD:USA) trades well below corporate averages relative to UAFRS-based (Uniform) Earnings, with a 9.6x Uniform P/E. At these levels, the market is pricing in bearish expectations for the firm, and while management has concerns about their HIV portfolio, guidance, and pricing in Europe, a strong development pipeline and overall business strength support long-term outperformance and equity upside if GILD is able to maintain current profitability levelsSpecifically, management may lack confidence in the sustainability of strong underlying demand for their Descovy-based regimen, and may be concerned about their ability to meet raised guidance targets. Furthermore, they appear concerned about competitive pricing trends in Europe, and about fluctuations in their payer mix. Additionally, they may be concerned about their HIV portfolio balance, and about the expiration of their U.S. patent for ambrisentan, the active agent in Letairis. That said, the market's overly-bearish expectations for the firm suggest that while near-term upside might be limited, long-term outperformance remains justified
Gilead Sciences is a research-based biopharmaceutical company that discovers, develops and commercializes medicines. The company's primary areas of focus include viral diseases, inflammatory and fibrotic diseases and oncology. The company's products include: Biktarvy for the treatment of HIV-1 infection in certain patients; Vosevi?, a single tablet regimen of sofosbuvir, velpatasvir and voxilaprevir for the re-treatment of chronic hepatitis C virus infection in adults; Vemlidy? for the treatment of chronic hepatitis B virus infection in adults with compensated liver disease; and Yescarta (axicabtagene ciloleucel) for the treatment of adult patients with relapsed or refractory large B-cell lymphoma.
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