COVID-19 STOCK TO BUY: GILEAD SCIENCES

Updated: Jul 2, 2020


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GILEAD SCIENCES (GILD) has announced on Monday that it will charge $390 per vial of remdesivir from Government entities. The list price of remdesivir for private insurers will be $520 a vial, or $3,120 for a five-day course.


The COVID-19 cases are still surging, the demand for remdesivir is likely to be high. The number of COVID-19 cases is sky-rocketing and remdesivir is one of the few drugs that have shown some promising results on COVID-19 patients.


The European healthcare regulators from the European Medicine Agency (EMA) has also approved remdesivir on Thursday by its Human Medicine Committee (CHMP) for treating coronavirus symptoms in adults and adolescents from 12 years old.


Investors have shown some concern over the ability of Gilead Sciences to manufacture remdesivir in adequate quantities to meet the high demand, but I am not too concerned, toll manufacturing is always a feasible option for pharmaceuticals.


ANALYST RECOMMENDATION:


The 23 analysts offering 12-month price forecasts for Gilead Sciences have a median target of $81 per share, with a high estimate of $97 and a low estimate of $58.

The median estimate represents a 8.4% increase from its current level. Meanwhile, the high estimate implies a potential upside of up 29.8% and the low estimate suggests the stock could fall by as much as 22.3%.


POST CORONAVIRUS OUTLOOK:


The current price-to-earnings ratio is 19.7x and a dividend yield of 3.57%.


Shares are likely to trend higher in the near-time. Apart from remdesivir, Gilead Sciences has a decent portfolio of antiviral drugs used in the treatment of HIV, hepatitis B. hepatitis C, and influenza. Their HIV drug has shown potential and sales have increased 14% for the quarter, the HIV program will continue to be a major growth driver for Gilead Sciences.


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