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.
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.
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