Markets

Trade of the Day: Gilead Sciences, Inc. (GILD) Stock Looks Like a Bargain

Dice with pencil on graph paper

InvestorPlace InvestorPlace - Stock Market News, Stock Advice & Trading Tips

Gilead Sciences, Inc. (NASDAQ: GILD ) - On Nov. 1, Standard & Poor's Capital IQ lowered their target by $20 to $105 on Gilead; however, they kept their strongest buy rating, a five-star "buy" on the stock with a "next 12-months EPS estimate of $11.36."

Sales and earnings fell for the third quarter, and they lowered their 2017 earnings estimate to $11.44, down from $11.62 in 2016. But HIV sales were strong, up 20.7%, and S&P views the stock, now trading at 6.6X the next 12-month EPS as a strong purchase.

They also forecast a large cash flow, positive capital deployment and market leadership in HCV (hepatitis C) and HIV treatments. They note a "solid pipeline" of future treatments for viral, bacterial and fungal infections, cardiovascular conditions and cancer. But its strongest recommendation of "five-stars" is based on the very low price-to-earnings ratio of 9.25X, which is below peers by a significant margin. GILD pays an annualized dividend of $1.88 for a dividend yield of 2.5%.

Technically, GILD appears to be in the process of building a base. It broke through its bearish resistance line early this month on a high-volume gap from a bullish "W" formation, briefly penetrating its 50-day moving average at $76.50.

The remainder of November was spent consolidating under the 50-day MA, and last week it made several attempts to attack it. Until GILD breaks above the 50-day moving average and successfully holds above $80, I consider it in a downtrend recovery mode. However, fundamentals appear to be improving, and for those who search for a bargain, I know of no better trade or investment than Gilead Sciences.

Buy GILD at $75 with a target of $85-plus. A stop-loss at $71 is suggested in the event that the stock resumes a downtrend.

Click to Enlarge

The Nasdaq and Tech Stocks Quietly Lead

The Nasdaq was almost unheralded as it broke to a new closing high at 5,531.82. The junior index has jumped almost 30% from its February low, and yet on Monday most investors were focused on the Dow and its attempt to overcome the 20,000 line.

The post Trade of the Day: Gilead Sciences, Inc. (GILD) Stock Looks Like a Bargain appeared first on InvestorPlace .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

GILD

Other Topics

Stocks