Kraienköppe schreef op 9 augustus 2016 14:29:
Gilead Sciences shares have landed in the bargain bin
1. At $80 a share, you get Gilead’s research pipeline essentially for free. Gilead shares have been hammered so badly, investors no longer assign any value whatsoever to its research pipeline, which has a lot of potential. Gilead has 34 products in development for the treatment of ailments ranging from cancer, Crohn’s Disease, and liver disease, to pulmonary arterial hypertension. There’s also another one on the way for HCV. Seven of these product candidates are in late-stage Phase III development, and 18 are in Phase II studies.
Even assuming a 50% decline in HCV treatment revenue and sharp declines in HIV drug revenue over the next five years, Gilead’s base business — excluding the pipeline — is worth $75 to $80 a share, says Michael Yee, biotech analyst at RBC Capital Markets. Credit Suisse biotech analyst Alethia Young puts the value of the base business at $84 a share.
Gilead has the firepower to do more deals. With rich operating profit margins of about 66%, the company generates tons of cash. It brought in $4.9 billion in the second quarter alone. It has a $24.6 billion cash war chest. Tellingly, Gilead has slowed its share buybacks. This “suggests to us a build-up of dry powder for mergers and acquisitions over the next six to twelve months,” notes Barclays analyst Geoff Meacham, one reason he has an “overweight” rating on the stock.
www.marketwatch.com/story/this-beaten...