Key Takeaways on Why Gilead Sciences, Inc. (GILD) Is A Buy According To Barrons

Most recently, Gilead Sciences, Inc. (NASDAQ:GILD) issued a letter to every doctor on the usage of its hepatitis C drug, Sovaldi, as well as, Harvoni along with amiodarone, the heart medication. The company issued a warning letter following its mixture causing a bad reaction, which included a death of the nine patients.

Dismissed Possibility of Sales Drop

Predictably, Gilead Sciences, Inc. (NASDAQ:GILD) stock reacted unfavorably to the news. However, the Street analysts dismissed any possibility of both the drugs ruining the company’s sales. One of the analysts described the event as a non-event and predicted ‘zero impact on sales’. The analyst went further stating that the drop in stock price could be taken as a buying opportunity of the stock.

According to Barron’s reports, the stock continues to remain attractive. Aside from the price-to-earnings multiple, the company is well positioned to deliver strong growth in profit and pay quarterly dividends, which is a rare case in the biotech industry. Its earnings multiple is the lowest, compared to any other biotech in the broader index, S&P 500.

Gilead Sciences, Inc. (NASDAQ:GILD) is one of the largest drug makers of biotech in America with sales of nearly $24.5 billion last year. Barron’s named it as of the favorite stocks in December for the current year. While its Solvaldi generated sales of $10 billion, Harvoni delivered $2.1 billion sales revenue in the last year.

Cheap Stock

Wells Fargo & Co (NYSE:WFC) and Sanford Bernstein analyst have reportedly said that a small number of patients could have been impacted resulting in the company’s latest warning. Both argued that the overlap in patients taking the hepatitis C drug and heart patients taking amiodarone was small. Brian Abrahams from Wells Fargo predicts that at the best sales could be impacted by $75 million, which is a small drop in the bucket.

The latest news was termed as a minor one as far as Gilead Sciences, Inc. (NASDAQ:GILD) is concerned. At the current multiple, the stock looked cheap with good prospects for growth.

Viraj Shah

Viraj Shah has completed M.Com (Finance) and is currently pursuing his CFP. He tracks US markets along with other global markets like India very closely. He is very passionate about stocks, real estate, and technology. He also believes that money can always be made in the market.

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