Hi All,

I discovered this board recently. I follow the discussions very closely including Saul’s lucid yet detailed monthly updates, and am very impressed by the success of Saul’s methodology. I intend to invest in the companies which have shown good price growth and liked by Saul and many others on this board.

However, I am not sure why the above company with 111% YoY EPS growth, 67% YoY Rev growth, TTM P/E of 10 and 1YPEG of 0.09 (data extracted from Kevin’s excellent and easy to use tables) does not appear to attract any attention for investment purposes. Fidelity gives it a score of 9.7 (very bullish) and Yahoo gives a score of 1.9. What am I missing? Is there some other criteria that this company Gilead does not satisfy unlike the other stocks liked by investors here?

Thanks for your attention.


Possibly because their sales of Sovaldi and their HCV portfolio are believed to be a one time sales impact. Not only will they not necessarily grow the sales but they will decline almost as fast as they happened.

Hi Alphab,

I own Gilead, and I think it is a great long-term investment.

I believe the hesitation, both here and in the market as a whole, lies in uncertainty of ‘whats next?’. They dominate the HIV treatment market, and now they dominate the HEP-C market (as least for some genotypes). The success of their HEP-C cure has been phenomenal, driving revenues and earnings sky-high for the past couple of years.

But, what next? What is the next driver of superior growth?

THAT is the question. I think they will use the huge cash reserves they are reaping from the HEP-C franchise to buy smaller companies with promising pipelines. There has been talk focused especially on getting into the HEP-B business (which seems to be even bigger than HEP-C). But right now, there is no heir apparent, and the sweet earnings growth will soon level off as Harvoni/Sovaldi penetrate more and more markets. Not this year, maybe not next year, but ultimately, they will revert to an ‘ordinary’ growth rate.

I honestly thing that the market hasn’t yet adjusted to the rapid acceptance of the HEP-C drugs by many countries and many insurers. The thought was that the $84,000 price tag would doom it to modest success, but since the cure rate is so high, it is being welcomed by most providers. So, market saturation in the US is still several years out, and the rest of the world will continue to adopt these drugs. I see at least 2-3 years of stellar growth. Eventually, Mr. Market will fall in love and drive the price up accordingly.

Just my thoughts as a fellow investor. Right now, Gilead offers growth at what appears to be a great price.

Tiptree, Fool One guide, long GILD


Hi alpha,

Saul’s feelings on GILD are in the knowledge base:…

## Investing Ethically
I have occasionally not felt comfortable in investing in a company that everyone else liked. For example, I was uncomfortable with ZLTQ because it’s a weight-loss company, with all those before and after ads you are familiar with.

Then there’s HZNP, a little pharmaceutical company whose meds are combinations of cheap non-steroidal anti-inflammatories like ibuprofen, combined with cheap over-the-counter stomach-protectors like ranitidine and omeprazole, all generics. Then they charge huge amounts for the combination medicine (which people could easily take as two cheap generic over-the-counter meds). Their investor stuff is all about how good their marketing is, and how they are convincing doctors to prescribe these overpriced meds, not about how effective they are. With a whole universe of great companies out there, is this really where I want to put my money?

I had the same problem with GILD, a company that the MF, and a lot of people on this board, love. Is it right to charge $80,000 for pills that cost maybe $1.00 to make, using the justification, basically, that they work? They should work. That’s the whole idea of a medicine. And they cure a chronic and potentially fatal disease. Does that mean that the company that makes an antibiotic that cures your pneumonia, which was going to kill you a lot quicker than hep C, should therefore charge you $200,000 or $300,000 for the antibiotic? Or that the surgeon who removes your infected appendix (which was going to cause a very painful and miserable death) should charge $1,000,000, because he’s got you by the unmentionables? Is that the kind of world you want to live in? Is that the kind of company I want to invest in? Nope, it’s probably irrational, but those are just my feelings.

That said, a number of people who frequent this board do have GILD positions including myself.



The question with GILD is whether the bump in their EPS is a one time thing based on one new drug or whether it is likely that the growth will continue.

If you have increasing quarter-over-quarter EPS, you can’t call it a ‘one-time thing,’ even if you know why it’s jumped up.

I own GILD (in several different accounts, even), and believe that they will be able to continue the trajectory for at least another year. Beyond that might be a slowdown, but they generate SO much cash it will probably still work out fine in other ways (buyback, dividends, buying other profitable companies, etc.).