The big picture for Gilead Sciences (NASDAQ:GILD) is a promising one. But for investors interested in buying GILD stock, a bit of patience and price confirmation are the prescription for longer-term profits within the portfolio.
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In a world stricken by the novel coronavirus, and a stock market that’s done more than its share of climbing a wall of worry and discounting Covid-19’s societal and economic over the past month, today’s buy decision might seem a bit less approachable. That’s certainly understandable.
The fact is the S&P 500 is up nearly 30% in just over a month’s time. And growth names such as Shopify (NYSE:SHOP) and Tesla (NASDAQ:TSLA) have led the charge with even larger gains which have stretched greater than 60%.
It’s been a record-breaking rally and nearly as amazing as the history-making, corrective fallout preceding it. But it would be a mistake to include biotechnology giant Gilead in that grouping. All one has to do is look at what’s happening off and on the price chart of GILD stock for evidence of sustainable profits beyond the short term.
It’s no secret Gilead is one of a handful of drug manufacturers with a potential therapy to combat Covid-19. And unsurprisingly, day-to-day headlines inciting both fears and jeers in GILD stock are par for the course as evidence of remdesivir’s effectiveness is being figured out. As it stands though, the verdict on multiple clinical trials is still very much in the deliberation phase.
But remdesivir isn’t the end all, be all for Gilead either. For today’s investors with an eye on the big picture, Gilead is more than just about winning the arm’s race to combat the coronavirus.
Looking past the disease, the company’s substantial HIV drug portfolio led by its drug Biktarvy, Gilead’s recent moves into oncology and earnings are big deals as well. It would be a mistake to ignore those potential catalysts. And that’s likely to start with Thursday’s Q1 release when the drug maker is forecast to deliver profits of $1.59 per share on revenues of $5.4 billion.
GILD Stock Monthly Price Chart
Source: Charts by TradingView
In front of this week’s corporate confessional, the unknowns in GILD stock or maybe even recent downgrades like UBS’ almost laughable ‘up too much’ valuation cut to shares shouldn’t be entirely ignored. But I’d stress Gilead’s monthly chart and nearby price action should take precedent regarding a purchase of shares.
Technically, the past five years have been anything but pleasant for long-term shareholders of Gilead. While the broader market has rallied strongly to all-time-highs, Gilead has been victimized by a larger correction. Shares are down about 26% from their mid-2015 all-time-high.
Investors might contend Gilead’s share price misfortune was of its own making as the company needed to shift its profit-center away from a successful Hepatitis-C franchise. Today however, as the company has grown in different markets and now with the coronavirus acting as a speculative catalyst, GILD is re-emerging as a breakout candidate.
On the illustrated monthly view Gilead stock has shown a couple very promising heavy volume attempts at rallying into the right side of its corrective base. Thus far both February’s and March’s highs climbed above the mid-pivot of the stock’s ‘W’ base and 50% retracement level before retreating.
To be fair, the drop in share price back below resistance is modestly concerning. And along with an overbought stochastics, the situation could be a sign Gilead stock, as USB has suggested, has gone too far.
The Bottom Line on GILD Stock
Just call me an optimistic doubting Thomas. I see today’s hesitation as a positive and not wholly unsurprising given the size of GILD stock’s drawn-out basing action over the past five years. And at the end of the day or more aptly, maybe the start of next month, a third attempt at Gilead shares moving past resistance inside a very healthy-looking base will be worth buying.
Disclosure: Investment accounts under Christopher Tyler’s management do not currently own positions in any securities mentioned in this article. The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional options-based strategies and related musings, follow Chris on Twitter @Options_CAT and StockTwits.