Opinions
The Monthly Gems by Allan Tong
Gilead Sciences Inc.
GILD-Q
TOP PICK
May 11, 2020
In the race to find a treatment, Gilead currently leads with its remdesivir. It's the name on every investor's lips and trading screens. Tests so far indicate that remdesivir shortens the recovery time of some Covid-19 patients, specifically those who take remdesivir recover after 11 days, which is four days faster than those who did not take it. Last week, the American FDA allowed doctors to use this drug on an emergency basis on patients hospitalized with Covid-19.
However, the FDA has not formally approved remdesivir, because it requires more testing. Currently, there are several ongoing clinical trials to test whether the drug can stop Covid-19 from replicating. In other words, remdesivir helps some patients heal faster, but isn't the magic bullet, at least not yet. In this horse race, Gilead is out front, but will it cross the finish line faster.
Gilead pays a 3.4% based on a payout ratio of 65.9%, and trades at a PE just under 20x, with a forward PE of 13x.
$80.800
Stock price when the opinion was issued
biotechnology
pharmaceutical
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In past years, biotech was the safe trade, but this year risk is back, so these stocks have fallen out of favour. Also, there are so many drugs in trials now and big pharma needs new product. She's looking at Gilead and Moderna, because they have low PEs and alot of drugs in development. However, the overall sector is risky.
biotechnology
pharmaceutical
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Was upgraded today
It's a biopharma which as a group did very well last year. Compare that to the smaller biotechs which have not done well the past 3 years. This year, biopharma and staples have underperformed. This boasts a high free cash flow yield and has a great product cycle coming.
biotechnology
pharmaceutical