Gilead Sciences Inc. (GILD)

(Market Call Minute.) There is not much growth here, but with their hepatitis C and having a stable cash flow, it would be a Hold.

Biotechs have done quite well, and this is a period of seasonal strength for them. They tend to do well between June and mid-September, and then tend to peak. This one tends to do the same, but it is not showing up this year. Between June and a peak in September, the average gain is almost 20%. Chart shows a long downtrend with a line of support at around $70-$70.50. This is a descending triangle, and if it breaks down through that, you could see considerable downside pressure. He would not be holding this.

It depends on one or two drugs. They ran into a lot of competition on one of their drugs. Competitors have come out with drugs that are cheaper and GILD-Q had to take their prices down.

Has had concerns that the hepatitis C drugs they own, is highly effective, but there are competitors that are taking share. Also, has had price deterioration. A very expensive drug with a $90,000 price tag for a 90-day cure. Groups and the government have exercised a lot of pressure, and have been able to discount that price, which has reduced margins dramatically. It looks cheap, but this is a bit of a trap. Thinks they have developed a fairly good cash hoard. If they made a smart acquisition, he thinks he would be very additive to the company. Would probably not be his 1^st choice in the space.

They generate a lot of cash. The stock has not done well because their Hep-C drug is very affective and the demand for the drug will go down. He would hang on and you should see the share price increase.

It has had quite a slide. You have slowing growth and a loss of some blockbusters. You are in transition to a steadier eddy pharma company. It is a long term buy.

This is down because their main drug has new competition, which is always the problem in drug companies. He is always a little leery about the patent protected drugs. They have competition, and are always getting knocked off by the generics. There is always the risk that they get sued by users. He decided not to get involved with this, because they make too much money from one disease, and felt they were vulnerable.

(A Top Pick June 16/15. Down 28.92%.) A head scratcher for him. His model price is $178, a 116% upside. He still likes it.

The Valeant (VRX-T) fiasco has hit all these stocks. This one has been singled out, but if they can cure hepatitis C, that would be fantastic. He is looking for an upside of 120%. Thinks they are a perfect candidate as a takeover target. Dividend yield of 2.27%.

This has been a tough ride this year, and is down about 18%. Valuations at these levels have priced in a lot of the bad news. They have a strong pipeline of 38 products, 9 phases in stage III. Trading at around 7X PE and you are getting a decent yield of 2%.

Trading around 7X this year’s and next year’s earnings. That tells him there is no growth. Their business is twofold, 35% in HIV franchise. He is seeing declines in their hepatitis C business. Sees increased competition coming in. They need to fill out their pipeline and they have the balance sheet to do it. Very inexpensive.

This is a large cap diversified biotech company. Higher quality than most. If you have a long-term time horizon, this should do fine.

Has dropped a little because Merck (MRK-N) came out with a competing hepatitis C product, but their product is much more expensive. Still sees them as being able to maintain about 85% market share with potentially 15% growth per year on the hep C product. Very good value here with really strong growth over the next year.

It has looked attractive on a few occasions, but has only come back to disappoint. The big debate is still their hepatitis drug. There are rumblings that Merck (MRK-N) was going to come out with a positioning against them. Earnings are still very strong. The P/E ratio is ridiculously low. (See Top Picks.)

Has a P/E ratio of 7.4, which is extremely low, less than half of the S&P, and its growth potential is much more than the S&P. PEG ratio is well below 1. A screaming buy as far as the fundamentals are concerned. However the chart is pretty ugly. It’s in a downtrend now with lower highs and lower lows. He would add a little, but have a stop loss on it. It will probably have a higher price 24 months from now.