01-29-2016, 04:14 PM
(01-29-2016, 12:13 PM)Rasec Wrote: Should we start getting nervous about Gild?
I get they still make a lot of money, but how likely is that to change in the next few months?
I don't think there is any question that they can make a lot of money, and I think the grandstanding from the politicians regarding drug pricing will be more bark than bite, just as it always has been. Remember we are in an election year, politicians have to look tough for their constituents.
GILD and really all of the biotech sector has been hit hard over the last 6 months. GILD now trades with a roughly $120B market cap while it has $15.7B in cash and is producing $14B+ in annual cash flows. Take out the cash and it is trading for less than 6 times expected 2015 earnings.
The market is pricing in a huge cut for future earnings, but even completely removing all HCV income from Harvoni and Sovaldi and the company would still be fairly valued off of all of their other sales. I'm hoping for a ~20% dividend boost along with Tuesday's earnings release, and am expecting EPS to once again beat estimates with guidance above 2016 estimates as well. No idea if any of that will finally turn the sentiment, but I won't be selling my shares anytime soon and am happy to be reinvesting my dividends at a discount.