GILD

[Dividend Watcher]

It's not trading like the hot stock everyone is talking about. I find it odd that a company that literally owns the HPC market right now and for the foreseeable future and has earnings growth in the high teens is trading at a trailing P/E of around 19. Is there some underlying story I'm missing?

[Roadmap2Retire]

I think its competition from JNJ's HPC treatment.

Heres an article speculating the causes.
http://www.streetinsider.com/Analyst+Com...08605.html

[earthtodan]

JNJ's competition should trail far behind. I think the reason GILD isn't expensive is because of fear that the premium price tag for their Hep C drugs won't stand. Of course their case is that their customers are not patients, but insurance companies, and they're saving their customers a ton of money.

I looked at it long enough to decide it was a buy, and got in at an average cost basis of 100.

[EricL]

Own GILD in my investment club and bought it recently for my son's ESA plan, both at around a $92.50 basis.

The stock has tripled since the beginning of 2013, so its hardly a laggard by any means. I suppose there is just enough uncertainty to discount future earnings projections, and enough doubt about the long term prospects to pay a high multiple, but I think as the quarters go on and they continue to produce great numbers, the share price will increase accordingly.

Keep in mind the huge cash flows this company will be generating. I expect share repurchases to be accelerated in 2015 as long as it continues to trade at a reasonably cheap multiple, and also wouldn't be surprised to see a dividend instituted as well.

[Kerim]

I haven't taken much of a close look at this one, not being a DG stock and all. But I recall Chuck Carnevale highlighting it in a couple of articles over at SA earlier this year (I think he was showcasing interesting growth stocks). Would love to hear more.

Eric -- how does the balance sheet look in light of those huge cash flows?

[EricL]

(11-05-2014, 02:38 PM)Kerim Wrote: I haven't taken much of a close look at this one, not being a DG stock and all. But I recall Chuck Carnevale highlighting it in a couple of articles over at SA earlier this year (I think he was showcasing interesting growth stocks). Would love to hear more.

Eric -- how does the balance sheet look in light of those huge cash flows?

Here are the cash and cash equivalents over the last 4 quarters from Morningstar.

Q3 2013 = $2.011B
Q4 2013 = $2.113B
Q1 2014 = $6.404B
Q2 2014 = $8.731B

Here is from their latest earnings release:
Cash, Cash Equivalents and Marketable Securities

As of September 30, 2014, Gilead had $7.69 billion of cash, cash equivalents and marketable securities compared to $9.58 billion as of June 30, 2014. During the third quarter of 2014, Gilead generated $4.04 billion in operating cash flow and utilized $5.79 billion to repurchase shares and settle the warrants related to the 2014 convertible senior notes, which were retired in May 2014.

[Roadmap2Retire]

Related: JNJ won FDA approval for use of its HepC drug to be used with GILD's HepC drug

http://www.bloomberg.com/news/2014-11-05...cmpid=yhoo

[twil]

Do you guys think they will ever start to pay out dividends?

I really want to invest in this company at some point.

[Dividend Watcher]

In my opinion, you won't see dividends for quite a while yet.

GILD is plowing a lot of their cash flow back into R&D, Debt/Equity is up around 60%, they have a plethora of products in the pipeline, there is no corporate culture of distributing dividends and they are on the lookout for further purchases all augur against a dividend in the near future. It took AMGN around 30 years before they started paying a dividend & Biogen still doesn't pay any.

GILD is in my speculative category and am not expecting dividends for a long while.

[EricL]

(11-21-2014, 01:17 AM)Dividend Watcher Wrote: In my opinion, you won't see dividends for quite a while yet.

GILD is plowing a lot of their cash flow back into R&D, Debt/Equity is up around 60%, they have a plethora of products in the pipeline, there is no corporate culture of distributing dividends and they are on the lookout for further purchases all augur against a dividend in the near future. It took AMGN around 30 years before they started paying a dividend & Biogen still doesn't pay any.

GILD is in my speculative category and am not expecting dividends for a long while.

Same here, it looks to me like management's plan is to plow cash flow into research and share buybacks. I own GILD in an investment club and bought it as first purchase in my son's ESA account but as strictly a capital gains play for me.

[EricL]

Looks like dividend investors can now buy Gilead!

Announced a $0.43 per share quarterly dividend which is about a 1.6% yield. Also announced a $15B share repurchase program and beat earnings estimates by $0.20 per share.

Highlights:
Gilead Sciences Announces Fourth Quarter and Full Year 2014 Financial Results
- Fourth Quarter Product Sales of $7.2 billion, Up 137 percent Year over Year
- Full Year 2014 Product Sales of $24.5 billion, Up 127 percent Year over Year
- Full Year 2014 Non-GAAP EPS of $8.09, Up 297 percent Year over Year

Cash, Cash Equivalents and Marketable Securities
As of December 31, 2014, Gilead had $11.7 billion of cash, cash equivalents and marketable securities compared to $2.6 billion as of December 31, 2013. During 2014, Gilead generated $12.8 billion in operating cash flow and utilized $5.3 billion to repurchase shares.

Conference call going on now, looking forward to reading the transcript tonight.

My investment club added more this morning at $106.67.

[Dividend Watcher]

I was quite shocked that they instituted a dividend. I would guess the board estimates they'll be awash with cash going forward. I hope so. I'll probably add a speck more myself in the next day or two.

GILD has now gone from pure speculative play position to a possible longer hold. I want to see how the pipeline progresses before deciding. In the meantime, I'll ride the HCV cash machine. After-hours trading is not going so well. Hmmmmm ...