Why Gilead’s Stock Is A Buy?

Gilead HIV drugs,

The biotech giant has a potential to perform outclass despite its slowing HIV drugs sales

Gilead Sciences has been pushed away by a lot of investors after its blockbuster drugs –Harvoni and Sovaldi –couldn’t generate as high revenue as it had made at time of its launch. However, it wouldn’t be prudent decision to completely shun the stock. The biotech giant is still the leading company in the health care and retaining its stock is a good decision.

The biotech giant is famous for its huge investments in Research and Development and Mergers and Acquisition which has been the ladder of success for the company. These investments had enabled the company to advance the health care so much so that the long untreatable diseases are now getting their due share of a treatment.

Several analysts have shown their concerns that the growing competition in HIV by Merck & Co and GlaxoSmithKline might shake Gilead’s firm grounds. This is however not entirely true. Although the biotech giant’s flagship drugs are witnessing a slight decline in its sales however this is not permanent.

Just last year, the biotech giant reformulated its drug Viread –a HIV drug which has less threat to liver. This latest formulation –TAF –is part of new drugs such as Discovy, Genvoya, and Odefsey. Due to the current reformulation, company’s HIV product lineup got a boost and in comparison to last year’s sales of $2.8 billion the company’s sale went up by 18%.

In the similar fashion, more innovation and tweaking is coming in for its hepatitis C line-up. A new pan-genotype therapy is in queue for attaining FDA –which might be received most likely on June 28. If the drug gets approval then it will be the first ever genotype-agnostic drug in the market and will likely send firm’s stock soaring high.

Assuming on the basis of how well its Hepatitis C drugs performed in the market, a successful research in nonalcoholic steteohepatitis and autoimmune disease will also guarantee solid sales for the company.

Last year in December, Gilead obtained licensing rights to filgotinib –a rheumatoid arthritis drug of Galapagos NV –and the same is in phase three of its research. Once the trial works out then the said drug will contest in billion-dollar drugs market. Likewise, another opportunity for the company lies in its treatment of NASH –a form of liver disease. The disease has becoming a reason for the liver transplant therefore a drug with modest cure rate will do wonders in the market.

The key advantage which the biotech giant has is its stable balance sheet. There is nothing that attracts the investors more than a strong financial statement. Thanks to the strong revenue which the company has reported over the years, the firm is in a very strong position, financially.

By the end of March, the US biotech leviathan disclosed cash worth $21 billion in company’s statement. Such financial position has sent the company on top of other biotechnology companies.

Summing up abovementioned factors, it can be assumed on plausible grounds that Gilead has potential of performing at par. At the market which closed on Friday, Gilead Sciences Inc. stock stood at a price of $82.65. The 52 week range of the stock is $81 to $123.