Gilead Sciences: 4 Reasons This Stock Has Much More To Rise
Gilead Sciences Inc. (NASDAQ: GILD) stock surged to a new 52-week high at $106.69 recently on its fourth quarter of 2024 earnings release. After being asleep for so many years, the stock has finally found interest again, hitting price levels not seen in a decade. The medical sector company was mostly known in the mainstream over its much-publicized controversy involving Sovaldi in 2013, its $84,000 treatment for hepatitis C (hep C).
The 12-week treatment was the world’s first and only cure for hep C, but the cost made it prohibitive even for those with health insurance. Controversy over the $1,000 per pill drug eventually died down after a Senate Finance investigation and new competition from AbbVie Inc. (NYSE: ABBV) direct-acting antivirals (DAAs) in the following years.
Gilead defended its pricing as the highest in the world at the time by arguing that the long-term cost savings from curing hep C far outweighed the expense of eradicating the disease. Here are 4 reasons that Gilead Sciences stock has much more room to rise.
1) Gilead Reported Robust Earnings and Raised Guidance
In its Q4 2024 earnings report, Gilead posted non-GAAP diluted earnings of $1.90 per share, beating consensus estimates by 16 cents. Revenues grew 7% YoY to $7.57 billion, crushing the $7.15 billion consensus estimates. The increase was driven by higher product sales and lower acquired in-process research and development expenses. The product gross margin rose to 79% in Q4, compared to 70% in the previous year. The company generated $3 billion in operating cash flow and closed the year with $10 billion in cash and cash equivalents.
Gilead issued upside guidance for the full year 2025 of EPS between $7.70 and $8.10, beating consensus estimates of $7.61. Product sales are expected to be between $28.2 billion and $28.6 billion, including Veklury sales of $1.4 billion, which is its COVID-19 treatment.
2) Gilead’s HIV, Oncology, and Liver Disease Franchise Continues to Grow
In 2024, Gilead posted 8% YoY growth to $19.6 billion in its HIV product sales, driven by higher demand and higher average realized price. Biktarvy sales rose 13% YoY to $13.4 billion, driven by higher demand. Descovy sales rose 6% to $2.1 billion, also driven by higher demand. Its Liver Disease portfolio sales rose 9% YoY to $3 billion. Its Trodelvy breast cancer treatment sales rose 24% YoY to $1.3 billion, driven by increased demand in all regions. Gilead’s blood cancer treatments Yescarta and Tecartus sales rose 5% and 9%, respectively.
3) Gilead’s HIV Vaccine Is 100% Effective and Will Launch in the Summer of 2025.
Gilead achieved a breakthrough in HIV treatment with its Lenacapavir drug, which had 100% in Purpose 1 and 99.9% in Purpose 2 studies in HIV prevention. Lenacapavir, an antiviral drug sold under the brand name Sunlenca, has been approved for the treatment of multi-drug resistant HIV-1.
The company submitted a new drug application to the FDA for a twice-yearly Lenacapavir treatment for HIV prevention in late December 2024. Science magazine named it a 2024 breakthrough of the year. The drug was granted FDA breakthrough treatment designation (BTD) status to expedite approval. Gilead expects to launch in the United States in the summer of 2025 and in Europe by the end of 2025.
4) GILD Stock Forms a Bull Flag Breakout
A bull flag pattern consists of two parts. First, the flagpole is a steep upward move in the stock that ends at its peak. Then, the flag forms a consolidation with parallel descending trendlines. The pattern is confirmed when the stock breaks out above the upper trendline and surpasses the flagpole's peak.
GILD triggered the daily bull flag breakout on the gap through $96.28 following its Q4 earning beat. The upper gap fills support at $100.83. GILD hit a 52-week high at $106.69 before pulling back. The consensus price target is $101.33, with the highest analyst price target at $125.00.
The daily anchored VWAP support is $96.07, and the daily RSI is starting to slip at the 68-band. Fib pullback support levels are at $101.53, $96.81, $92.87 and $89.15.
Bullish investors can consider using cash-secured puts at the Fib pullback support levels to buy the dip. If assigned the shares, then writing covered call at upside Fib levels executes a wheel strategy for income in addition to its 2.96% annual dividend yield.
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