Gilead Stock Surges 44.2% in 6 Months: Time to Buy or Sell?

Biotech giant Gilead Sciences, Inc.’s GILD shares have risen 44.2% in the past six months compared with the industry’s growth of 1.1%. The stock has also outperformed the sector and the S&P 500. It has grown steadily in the past six months.Earlier this month, Gilead reported better-than-expected third-quarter results and raised its annual earnings guidance yet again. Revenues increased 7% from the year-ago quarter’s level due to high HIV and Veklury sales.Approval of new drugs and encouraging pipeline progress have also boosted investors’ sentiment of late.Gilead Outperforms Industry, Sector & S&P 500Image Source: Zacks Investment ResearchGILD’s Leading HIV Franchise Maintains MomentumThe company’s leading HIV franchise has maintained momentum and its efforts to develop innovative HIV treatments are being appreciated by investors.With a market share of more than 49% in the United States at the end of the third quarter, its flagship HIV therapy, Biktarvy, continues to maintain its strong growth, thereby fueling the top line. The strong momentum in Biktarvy has enabled Gilead to increase its HIV sales target to 5% in 2024 from the earlier estimate of 4%. Gilead’s efforts to innovate its HIV portfolio are impressive. The company’s pipeline candidate, lenacapavir, demonstrated 100% efficacy for the investigational use of HIV prevention in cisgender women.  Data reinforce that twice-yearly lenacapavir could be a highly effective and potentially game-changing HIV prevention option.Gilead expects to file for approval of lenacapavir for HIV prevention before the end of the year. The successful development and potential approval of lenacapavir for PrEP should solidify Gilead’s HIV franchise, as lenacapavir needs to be taken twice yearly, unlike daily oral pills.Approval of Additional Drugs Strengthens GILD’s PortfolioEarlier this year, the FDA accelerated approval of seladelpar for the treatment of primary biliary cholangitis (PBC), in combination with ursodeoxycholic acid (UDCA), in adults who have had an inadequate response to UDCA or as monotherapy in patients unable to tolerate UDCA.The candidate was approved under the brand name Livdelzi. In March 2024, GILD acquired CymaBay Therapeutics Inc. for $4.3 billion, adding Seladelpar to its portfolio/pipeline. Livdelzi's approval strengthens GILD’s liver disease portfolio and validates its CymaBay acquisition.GILD Raises 2024 GuidanceConcurrent with the third-quarter results, GILD raised its annual guidance as growth in Veklury sales benefited its quarterly results. Product sales are now projected to be between $27.8 billion and $28.1 billion (previous guidance:  $27.1-$27.5 billion). Total product sales, excluding Veklury, are now expected to be between $26 billion and $26.3 billion (previous guidance:  $25.8-$26.2 billion). Total Veklury sales are now estimated to be $1.8 billion (previous guidance: $1.3 billion).Adjusted EPS is now anticipated to be in the range of $4.25-$4.45, up from the previous guidance of $3.60-$3.90.Pipeline Setbacks: A Concern for GILDGilead’s oncology portfolio, comprising the Cell Therapy franchise and breast cancer drug Trodelvy, has diversified the company’s overall business. However, the Cell Therapy franchise, comprising Yescarta and Tecartus, is under pressure due to competitive headwinds, which are expected to continue in 2025.Breast cancer drug Trodelvy has performed well since its approval. However, Gilead’s efforts to expand Trodelvy’s label suffered a setback due to the failure of its late-stage confirmatory TROPiCS-04 study on Trodelvy in locally advanced or metastatic urothelial cancer. In January, the late-stage study evaluating Trodelvy in previously treated metastatic non-small cell lung cancer also failed. These failures have somewhat dented Gilead’s efforts to strengthen its oncology franchise.Valuation & EstimatesAccording to the price/sales ratio, GILD’s shares currently trade at 4.11x forward sales, higher than the industry average of 1.71 and its mean of 3.51.Image Source: Zacks Investment ResearchThe Zacks Consensus Estimate for its 2024 earnings per share (EPS) has moved up 57 cents to reach $4.32 over the past 30 days. It’s worth noting that the annual earnings estimates have taken a hit due to acquisition-related expenses in 2024.  The EPS for 2025 has also gained 10 cents during the same time frame.Image Source: Zacks Investment ResearchConclusionGilead’s efforts to constantly innovate its HIV portfolio should enable it to maintain growth amid competition from GSK plc GSK. The company’s strategic deals and acquisitions to diversify its business are encouraging.Gilead has collaborated with Merck MRK to evaluate the investigational combination of islatravir and lenacapavir for the treatment of HIV. Recently reported data showed a treatment switch to an investigational oral once-weekly combination regimen of islatravir and lenacapavir maintained viral suppression in adults at week 48. Islatravir is Merck’s investigational nucleoside reverse transcriptase translocation inhibitor (NRTTI) under evaluation in multiple ongoing early and late-stage clinical studies in combination with other antiretrovirals for the treatment of HIV-1.Gilead’s strong fundamentals make it a good biotech stock to buy and hold for the long term. We believe there is more room for growth, even after the current rally. The company’s attractive dividend yield is another positive. Gilead has been consistently increasing and paying out dividends. Its strong cash position (as of Sept. 30, 2024, GILD had $5 billion of cash, cash equivalents and marketable debt securities) indicates that the current yield of 3.33% is likely to be sustainable.Gilead currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Free Today: Profiting from The Future’s Brightest Energy SourceThe demand for electricity is growing exponentially. At the same time, we’re working to reduce our dependence on fossil fuels like oil and natural gas. Nuclear energy is an ideal replacement.Leaders from the US and 21 other countries recently committed to TRIPLING the world’s nuclear energy capacities. 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