Gilead Sciences is a research-based biopharmaceutical group that develops and commercialises therapeutic medication for patients with life-threatening diseases. The group's primary focus includes HIV, Aids, liver disease, severe cardiovascular and oncology treatments. The group boasts a solid portfolio of over 25 different drugs, including several first-to-market regimens for HIV and chronic hepatitis C.
The prospects for the group are attractive, given a specific focus on R&D and acquisitions, which helped to mitigate the impact of weakening demand for its Covid-19 drug, Veklury (~15% of revenue in FY22, vs ~19% in FY21).
Technically, the stock price is forming a bullish flag pattern (refer to the parallel trendlines on the first chart) which suggests a potential continuation in the current up-trend. There is also strong underlying support with no meaningful price decline in recent months.
The stock is testing its 200-day simple moving average (SMA) of ~$80.15. A break above this level will be viewed a bullish signal and will confirm a positive long-term trend reversal.
Fading downside momentum according to the MACD indicator, as well as sidewards movement of the On-Balance Volume indicator, supports our bullish stance.
Share Information
| Share code | GILD US |
|---|---|
| Industry | Pharmaceuticals and Biotechnology |
| Market Capital (USD) | 99.68 billion |
| One year total return | 33.10% |
| Return year-to-date | -5.03% |
| Current price (USD) | 80.00 |
| 52 week high (USD) | 89.74 |
| 52 week low (USD) | 61.45 |
| Financial year end | December |
| Closing paragraph | The price has come under pressure since the beginning of the new year. |
Consensus expectations
(Bloomberg)
| FY22 | FY23E | FY24E | FY25E | |
|---|---|---|---|---|
| Headline Earnings per Share (USD) | 7.26 | 7.01 | 7.40 | 7.51/td> |
| Growth (%) | -3.39 | 5.55 | 1.47 | |
| Dividend Per Share (USD) | 2.92 | 3.06 | 3.15 | 3.19 |
| Growth (%) | 4.64 | 3.19 | 1.28 | |
| Forward PE (times) | 11.41 | 10.81 | 10.65 | |
| Forward Dividend Yield (%) | 3.75 | 3.86 | 3.99 | |
| Closing paragraph | Earnings growth in FY23 has been impacted by weakening demand as well as various macro-economic headwinds. Growth is expected to recover from FY24. | |||
Buy/Sell Rationale
Technical Analysis:
Long-term fundamental view:
| Share Name and position |
FOXF - Buy (Continue to hold) |
FCX - Buy (Continue to hold) |
IEX - Buy (Continue to hold) |
|---|---|---|---|
| Entry | 105.69 | 39.71 | 212.62 |
| Current | 114.54 | 42.38 | 221.48 |
| Movement | 8.4% | 6.7% | 4.2% |
| Summary text |
A price making higher highs and higher lows remains of interest. The stock crossed above its 200-day and -week simple moving averages. Upside momentum has regained strength, and this is supportive.
Our profit target is $126 with a trailing stop-loss of $106.30. Exit the position around 6 October 2023. |
Price symmetry remains of interest. The stock is trading above its 200-day simple moving average. Upside momentum has halted, and this is a concern.
Our profit target is $47 with a trailing stop-loss at $39.20. Exit the position around 18 October 2023. |
The price remains above the key support level and continues to test the 200-day simple moving average. Upside momentum is still supportive.
Our profit target is $240 with a trailing stop-loss of $211.70. Exit the position around 20 October 2023. |
| Share Name and position |
VOE - Buy (Continue to hold) |
SBUX - Buy (Continue to hold) |
KO - Buy (Continue to hold) |
|---|---|---|---|
| Entry | 137.42 | 102.92 | 61.64 |
| Current | 140.52 | 101.66 | 60.92 |
| Movement | 2.3% | -1.2% | -1.2% |
| Summary text |
The ETF price remains in a symmetrical triangle pattern and trade continues above the 200-day simple moving average. Fading upside momentum is still a concern.
Our profit target is $148 with a trailing stop-loss of $136.20. Exit the position around 15 September 2023. |
The price remains in a symmetrical triangle pattern. Trading continues to test the 200-day simple moving average. Fading downside momentum supports the bullish trend.
Our profit target is $114 with a trailing stop-loss of $99. Exit the position around 29 November 2023. |
Trading remains in a symmetrical triangle pattern and the stock continues to test the 200-day simple moving average. Emerging downside momentum is a concern.
Our profit target is $71 with a trailing stop-loss of $58. Exit the position around 15 March 2024. |
