GILD

Investment Analysis Clubs Saul’s Investing Discussions
1

Does anyone here have any thoughts on GILD as a buy. They report earnings on Tuesday and by PE(12), 1YPEG(.06!) measures the shares seem extremely cheap and are off 3.5% today on this market sell-off. The price seems to me to have been held down on fear and sentiment rather than results. I have seen speculation that they could make an acquisition soon, which might actually trigger an increase in price since one concern is their pipeline. I have been buying recently but probably won’t buy more at this point even though it seems like an opportunity.

From Neil’s 1ypeg.com site:


                                       GILD
           Price: $113.95          1YPEG: 0.06          Adjusted P/E: 12          

                        Adjusted Earnings - Historical Stats
+---------------------------------------------------------------------------------+
| Fiscal Q.     Adj. EPS     TTM EPS      YoY TTM Growth      Growth Acceleration |
+---------------------------------------------------------------------------------+
| Q1 2015          $2.94       $9.57              213.8%                   -27.7% |
| Q4 2014          $2.43       $8.11              295.6%                    39.8% |
| Q3 2014          $1.84       $6.23              211.5%                    42.9% |
| Q2 2014          $2.36       $4.91              148.0%                   174.1% |
| Q1 2014          $1.48       $3.05               54.0%                  1073.9% |
| Q4 2013          $0.55       $2.05                4.6%                          |
| Q3 2013          $0.52       $2.00                                              |
| Q2 2013          $0.50       $1.98                                              |
| Q1 2013          $0.48       $1.98                                              |
| Q4 2012          $0.50       $1.96                                              |
| Q3 2012          $0.50                                                          |
| Q2 2012          $0.50                                                          |
| Q1 2012          $0.46                                                          |
+---------------------------------------------------------------------------------+

                             Revenue - Historical Stats
+---------------------------------------------------------------------------------+
| Fiscal Q.      Revenue    TTM Revenue     YoY TTM Growth    Growth Acceleration |
+---------------------------------------------------------------------------------+
| Q1 2015         $7.60B         $27.5B             102.9%                 -17.5% |
| Q4 2014         $7.30B         $24.9B             124.7%                  33.1% |
| Q3 2014         $6.04B         $20.7B              93.7%                  35.4% |
| Q2 2014         $6.53B         $17.4B              69.2%                  97.7% |
| Q1 2014         $5.00B         $13.5B              35.0%                 150.0% |
| Q4 2013         $3.10B         $11.1B              14.0%                        |
| Q3 2013         $2.78B         $10.7B                                           |
| Q2 2013         $2.66B         $10.3B                                           |
| Q1 2013         $2.53B         $10.0B                                           |
| Q4 2012         $2.70B         $9.71B                                           |
| Q3 2012         $2.40B                                                          |
| Q2 2012         $2.40B                                                          |
| Q1 2012         $2.21B                                                          |
+---------------------------------------------------------------------------------+

Steve

5 Likes
2

The 1YRPEG should be taken with a big, huge grain of salt because they recently added their HepC cure drugs which are slated to be the top selling drugs in history. Their full year over full year growth simply won’t continue at the same rate as last year.

Chris

1 Like
3

The 1YRPEG should be taken with a big, huge grain of salt because they recently added their HepC cure drugs which are slated to be the top selling drugs in history. Their full year over full year growth simply won’t continue at the same rate as last year.

Good point Chris. The current number does include that transition period in earnings so they are still showing a large growth rate.

Out of curiosity I went ahead and added a projection of earnings for this quarter at the same level as last quarter (2.94) and the 1YPEG only went up to 0.10 still. I added another couple of quarters with decreases in earnings (2.5, 2.3) and it was still only 0.34.

So, there still seems to be room with that number even though it’s exaggerated on the low side right now. I also think those decreases in earnings are unlikely.

Not trying to convince anyone of anything, just trying to figure out the numbers and what they might mean.

Steve

2 Likes
4

Out of curiosity I went ahead and added a projection of earnings for this quarter at the same level as last quarter (2.94) and the 1YPEG only went up to 0.10 still. I added another couple of quarters with decreases in earnings (2.5, 2.3) and it was still only 0.34.

If I recall correctly, Sovaldi launched during the Dec 2013 quarter but that quarter didn’t represent an entire 3 months since it launched toward the end of the quarter. Then there was a ramp up during 2014. Then there was the whole insurance. So I think to get a fair comparison that eliminates the drug ramping up effect you may want to start by using the Sept 2014 quarter numbers which means you won’t even get a 1YRPEG until the end of October when the Sept 2015 numbers are released.

Chris

1 Like
5

I also bought GILD back when Pro first recommended it and have been happy with the growth. The Hep C drugs have now been impacting earnings for a few quarters, but the question in my mind is how close they are to reaching their potential. They were very expensive so that caused a lot of bad press, but as competition arrived, they had to lower the prices to increase volume. The number of cases to be treated still has a long runway in my opinion. These drugs are apparently very inexpensive to produce so the margins are great even with the lower sales price.

I know some have commented on the evils of big Pharma (charging so much for critical medications) and I do agree in most cases. What makes GILD different in my opinion is that they are selling a medication that actually cures the disease. Most big Pharma just helps with symptoms so they can never cure anyone but always sell their products.

Just my opinion, but I believe GILD even with the huge Market Cap has some room for growth.

Brian

2 Likes