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Actionable news in GILD: Gilead Sciences, Inc.,

Gilead Sciences May Be In A Lull, But Its Potential And Its History Make It Attractive

GILD pays a 1.55% annual dividend.

GILD saw +75% adjusted EPS growth year over year in Q3 2015.

GILD saw +37.3% revenue growth in Q3 2015.

GILD has a great pipeline. It also has a war chest of $25.1B that many think will be used at least partially to make one or more big accretive acquisitions.

Gilead Sciences Inc. (NASDAQ:GILD) is a major biotechnology company that was founded in 1987. Since that time it has grown into a very large capitalization company with a market cap of $158.54B and an enterprise value of $166.51B. Its total cash of $25.1B as of September 30, 2015 makes it an extremely stable stock. The increase in cash and cash equivalents in Q3 2015 (from $14.7B) was primarily due to the issuance of senior unsecured notes in September 2015 for $10.0B. This cash gives GILD an interest coverage ratio of 32.28x. It also gives it a war chest for a large, accretive acquisition, which it may already have identified.

In Q3 2015 GILD beat on adjusted EPS by $0.35 per share at $3.22 per share (+75.0% year over year). It beat on total revenues by $472 million at $8.295B (up +37.3% year over year). Of note, there was an -11% effect from foreign exchange in Europe. In Q3 2015 GILD generated $4.1B in Operating Cash Flow. It used $3.1B to repurchase 28 million shares; and it paid $627 million in dividends ($0.43 per share). On October 27, 2015 it upgraded its Net Product Sales for FY2015 to $30B-$31B from $29B-$30B. However, it did not upgrade EPS guidance in conjunction with this, although investors can probably count on a beat on EPS in Q4 2015. Gilead's continuing beats and raises to guidance are heartening to investors. GILD pays a 1.55% annual dividend.

The total sales revenues figures are in the table below:

At the top of the table are the results from the two Hepatitis C Virus drug sales -- Harvoni and Sovaldi. Harvoni is the simpler to use, stand alone, once a day tablet; and it is understandably taking sales from Sovaldi. Hence it is sensible to look at the two drugs in terms of combined sales. Total combined sales for the two for Q3 2015 were $4.798B compared to $2.8816B in the year earlier quarter (about 70.4% growth in HCV sales year over year). Unfortunately for GILD, this $4.798B in HCV revenue was down -2% sequentially. This means that sales are likely leveling off. In fact some pundits are expecting deterioration in sales in FY2016.

Yes, the prospects of competing drugs, Viekira Pak and Technivie from AbbVie (NYSE:ABBV) were seriously hurt by the recent strong FDA warning that they may cause liver damage. However, the warning was mostly for patients who already had advanced liver disease. Plus ABBV does have a deal in place with Express Scripts (NASDAQ:ESRX) to be its drug supplier of choice for HCV treatment. Still this strong warning from the FDA will scare a lot of doctors off. They will be hesitant to prescribe a drug that could bring them a malpractice suit.

Aside from the relatively good news for GILD about the bad news for ABBV, Merck (NYSE:MRK) has a new drug that many believe will receive FDA approval on January 28...


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