Recently, the board of directors at
Gilead Sciences Inc.
) authorized a two-for-one stock split. The action, which will
take shape through a stock dividend for stockholders as on record
on January 7, 2013, is aimed at increasing the number of
authorized shares at Gilead to about 1.52 billion from 759.3
million (as of November 30). The stock dividend is expected to be
distributed to the relevant stockholders on or about January 25,
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Following the stock split, every shareholder at Gilead (on record
on January 7, 2013) will get an additional share for each share
he/she currently holds. Gilead intends to commence trading at the
NASDAQ at the post-split price from January 28, 2013. Gilead in
its press release further stated that purchasers of its shares
between January 7 and January 28, 2013 will get a due-bill. The
due bill will make the buyer eligible for an additional share for
each share bought.
We note that shares of Gilead Sciences have been on an uptrend
since the beginning of the year driven by multiple positive
catalysts, including the purchase of Pharmasset, targeting the
lucrative hepatitis C virus (HCV) market and the approval of the
high potential HIV therapy, Stribild. The stock is currently
hovering around its 52-week high of $76.28, reached on November
23, 2012. We believe that the soaring stock price necessitated
the 2-for-1 stock split.
Apart from the positive developments noted above, Gilead received
further good news last month when it presented encouraging
top-line data on its HCV candidate sofosbuvir from a phase III
study. Sofosbuvir (formerly GS-7977) was added to Gilead's
pipeline through its acquisition of Pharmasset in January 2012.
Apart from Gilead, companies such as
Johnson & Johnson
) are also developing therapies to combat HCV.
We currently have a Neutral recommendation on Gilead. The stock
carries a Zacks #3 Rank (Hold rating) in the short run.