GILD - CC Thoughts

Share price - $82.74
TTM EPS (non-GAAP) - 12.61
P/E - 6.72!!!
Div Yield - 2.27%

As was written earlier, GILD increased their dividend almost 10% and authorized another $12B in buybacks. They have $8B left from the previous buyback program.

By my math, $20B will retire 14% of shares at $100/share and 17.5% of shares at $80/share. Part of the new program is an accelerated share repurchase (ASR) to be accomplished in the next three months. This seems a wise maneuver at the currently depressed PE.

Looking to 2016, GILD expects fairly flat revenue of $30.5B at mid-point. Geographically, US sales are expected to be on pace with the 2nd half of 2015. Roughly, 112,000 patients were treated in the 2nd half signaling about 225,000 for 2016. Europe is expected to grow while Japan is somewhat unknown due to both warehousing and new pricing regulations expected to impact Harvoni. Other smaller to medium size markets, such as Australia, are expected to grow.

The US population of HCV diagnosed patients is estimated at 1.5 Million suggesting 6 years of sales at the current rate not including patients who are yet to be diagnosed.

Looking to the future, there was quite a bit of talk about partnerships and acquisitions, and the recent landscape is making opportunities more attractive. It will be interesting to see what 2016 brings along these lines.

I stay invested in GILD because unlike other biotech firms, the market seems to be assigning zero value to drugs in the pipeline and potential M&A activity.

I may open an income position via a covered straddle or simply selling puts although I haven’t looked into premiums. Entering that position prior to earnings when IV is high would have been a better move in hindsight, maybe.

Just thought I’d jot a few items from the call down for everyone.

Take care,