Gilead Sciences Inc.

It has been a bit of a value trap for years. They were effective in the cure for HEP-C. For them it has been a declining revenue steam. They made an acquisition that did not work out. Revenues have dropped 40% over the last 5 years. He would stay clear of it.

Has long owned it and likes it. They had some bad years when they overpriced their hepatitis C drug and received bad press. They also sell HIV and heart drugs, sectors that are growing. They increased their guidance last week, a rarity these days. At 10x earnings, he'd buy it, not sell it. One overhang is that their CEO is leaving.

The valuation continues to get lower and lower. They have a lot of cash. Their HEP-C and HIV businesses were 50/50 and now the HEP-C business is only 25%. The new CEO coming is to spend some of the cash intelligently. (Analysts’ target: $88.05).

(A Top Pick August 3/2017, Up 8%) Recently exited and bought JNJ instead. Hurt by own success with drugs that cure. Great for society, but not great for the equity. Waiting for transitional acquisition that’s not coming.

It has had a long, long downtrend and recently found its footing, hitting his downside target of four times book value. $65 would be a good floor on this stock at which point you buy.

Looking at the graph it has been in a very difficult position in the last coupe of years. They essentially cured hepatitis C. It was an expensive drug. $98,000 per patient. It has come off patent. Competitors came to produce it now. They have been on the penalty box for the past year and a half. But they are making inroads on other drugs. They have had meaningful trials. At this value there is a good opportunity.

Gilead is trading at 10.5x next year's earnings, and just increased its dividend. They're losing sales on their hepatitis C franchise which was a winner for them three years ago. But they have advances in oncology through a recent purchase. Good, new drug products are coming out which could lead to growth. Lots of free cash flow and some buybacks. They need, however, growth to justify high valuations. This will be a slow road, but a good one. (Analysts' price target: $85.72)

It has been in the news a lot. They own technology that is a cure for Hep-C. There is a lot of controversy as they are expensive and a cure costs about $90,000. Lobby groups have negotiated better pricing. It has had huge cash flow and great earnings but is falling dramatically.

They took a huge hit with their hepatitis C drug, their key product, facing generic competition, while they have nothing else in the pipeline. They need to acquire or do something with their cash to grow. Sales are flagging.

He thinks the downward pressure is almost done on price. They are building an arsenal in the oncology and HIV areas. They have a good pipeline of opportunities and he likes management. He would buy it here.

It's been painful to own. Their primary drug cured hepatitis C, the holy grail. But there's little recurring revenue here, and it disappointed investors by not reinvesting their cash. However, their new HIV franchise could take market share. A hated stock for a long time, but that sentiment is now changing. Your patience is now being rewarded.

He likes the company. It had some difficulties but is recovering slowly. He likes the prospects for the business. (Analysts’ price target is 89$)

(A Top Pick June 2/17 Up 28%). He still likes this company and sees it as a value play. His model price is $100. He would love to see another pullback to $65 to buy more, but suspects it will continue to move higher.

(A Top Pick Feb.23, 2017, Up 23%) Their HIV business continues to grow. Their Hep C business was so good it was curing people too quickly, so their revenue declined. He bought it when the market was undervaluing both businesses. Meanwhile, GILD had lots of cash, so he expected them to do a deal. They did one for a company treating blood cancer, and that's working well. Should continue to grow rapidly and make another acquisition.

Really good valuation, but down 30% from highs three years ago. Known as the hepatitis C virus company, but the constant push-down on this stock is competition on the hepatitis C program. Done some M&A which pleased investors.

Owned it when a lot of people exited pharma during the U.S. election when candidates threatened these stocks. Better investments in other sectors like tech. That said, he doesn't own it now, but would love to own it later.

Issues about competition with its drugs. Earns 26% ROIC, EBITDA has come down. In a good area, including oncology and HIV. A good pipeline, cash flow and valuations. Likes it a lot.

(A Top Pick January 16/17. Up 14.3%) A pharmaceutical company. It collapsed at that time and that is why they bought it trading at 8 times earnings. It has a good dividend yield. It has two drugs. One of the drugs is curing everybody and revenue coming from there was falling and the market people overemphasize that. They have a lot of cash on hand. They think it could buy more things like a recent very good acquisition of a company with a new technique to fight cancer.

They had a great pop. He stepped out of Biotech and healthcare as a sector went to a neutral. He is more cautious on this as the entry gets higher.

(A Top Pick Dec 30/16. Up 3%.) A biotech company. Had 2 big products, a hep C drug and an HIV drug. The HIV drugs are doing quite well. The hep C drug is so good it cured people faster than expected. The stock ran up on the hep C drug, and is now declining. They have a lot of cash and acquired a pharmaceuticals company, which is a good acquisition for them. Good dividend yield and they should benefit from tax reform. He still likes this.

Has always shied away from this. They had a very successful ramp with their HEP C drug portfolio, a peak, followed by a fairly rapid decline. The decline came on a couple of issues. It was a total cure so there wasn't a recurring customer. Also, a number of other pharmacies came out with products that competed effectively, so there was price competition. The HEP C portfolio is falling about 40% year-over-year.

Has a very strong balance sheet, and is looking for future growth. They’re not able to satisfy that organically, so are going out to make acquisitions. They announced one a few months ago, and expects they are going to continue to look. However, they are not cheap, so Gilead may have to pay a very full price. The company is well-managed and owns fine assets, but she would wait.

He bought it at this level 3 or 4 year ago. The growth has stopped. The HEP C drugs caused it to run as well but they cured people so it was not going to lend itself to a lot of recurring revenue. The worst is behind them. They have other drugs in HIV and Oncology that could get the growth back up.

Technically, this has been having a difficult time in the last little while. It has a period of seasonal strength from about mid-December to around April of each year. We are not in the period of seasonal strength yet. It is forming a base pattern. Technically, if it gets above $78 level, that would be a confirmation of the bottoming pattern and that the security is going into its period of seasonal strength.

This has recently gone higher, to about $80, so there will be people wanting to sell. Avoid. You may have to wait a couple of years before the oversupply can be digested. Dividend yield of 2.86%.

They lost a lot with the HPV vaccine. They have so much cash on their balance sheet that they can pretty much buy anything they want. She likes it and owns it. They have opportunities through acquisitions.

(A Top Pick Nov 29/16. Up 1%.) Part of the issue with them was that they had a couple of drugs, one for hepatitis C that was so good that it was curing people. The market was worried that revenues were going to fall off because of that. They had lots of cash, so recently made an acquisition in the cancer area. They still have lots of cash. Thinks the AIDS drug will do well for them. They still have things in their pipeline that people are giving zero credit for.

Looking at a long-term chart, you can see the bleed, especially over a longer than a 1-year timeframe. They’ve had a very mixed quarterly performance. This is ultimately going to fall into that trap where you are facing a wall of people who have been buying it all the way down, and you are going to be meeting those people who are selling on the way up. The kind of situation he would step out of if he were in it.

This is among biotech stocks which historically, have done very well from April right through until the end of September. It happened again this year, although it didn’t happen last year. Look for an opportunity to take profits on strength.

(A Top Pick Oct 27/16. Up 13%.) Felt that a lot of the pharmaceutical companies had been beaten up and there would be a big uptick. The stock actually went down for quite a while. They did very, very well because of their HIV and hepatitis C drug. The problem with the hepatitis C drug is that they were curing people too quickly. Just made a recent acquisition on the cancer side which pushed the stock up a great deal. He still likes this.

They recently made an acquisition. If Kyte was so great why did they sell out? GILD has the ability to take them to market. The knock on the stock has been this cash cow and not reinvesting in their pipeline. They are not into oncology. Novartis got approval on a similar drug recently and that drove the stock higher. You are okay to hold this here. Let’s get through this November date.

About 50% of its franchises are based in hepatitis C. You really have to be careful, because this franchise is slowing. They have 2 prospective years of negative earnings growth, which is a huge headwind. Value this on its long-term cash flows. There are 2 things to consider. 1.) How sustainable are they. If that continues, then you have a leg to stand on. 2.) If you have falling rates, that is good for valuation. The problem is, we are probably going to have flat to rising rates, and Pharma M&A is a bit of a dice roll. He doesn’t buy into the story, and would prefer the Spdr S&P Biotech ETF (XBI-N). You could be a little more conservative using the iShares D J Medical Devices ETF (IHI-N).

They made a lot of money on their HEP-C drug, but sales have come off. They made an acquisition. They extract T-cells and re-engineer them to hunt for and kill cancer cells. They get FDA approval in late November. He is concerned that there is a lot of excitement that they will repeat what they did with the HEP-C drug. But they already specialized in HEP-C drugs when they bought that company. They are not in cancer drugs at present. He worries about why the company they acquired sold out at this point.

Just made an acquisition of Kite Pharma at a large premium. They have some wonderful oncology drugs. You have to give them the benefit of the doubt because they have a very good track record in terms of acquisitions. Thinks they will be able to use the Kite acquisition to supplement their portfolios. Also, they still have a lot of cash on the balance sheet so they have a lot more options. They can do another acquisition or can buy back stocks. He likes this for the long haul.

It has broken out of the 200 day moving average recently. As long as during any pull back that it holds the 200 and 70 day moving averages, we could expect to see some improvement. We could bounce up to about $80 before we struggle again. If it does not hold the $70 then get out.