Gilead Sciences (NASDAQ: GILD) is a leading healthcare company that derives the majority of its sales from drugs used to treat HIV. And he has an exciting new treatment, lenacapavir, that, if approved by the authorities, could be a game changer for HIV patients and drive significant growth for Gilead.
Given the stability the company offers investors, strong earnings, and attractive growth prospects, it's no wonder the stock has performed so well this year, up more than 20% so far. But given that the stock is now trading near a 52-week high, is Gilead still a good buy?
Lenacapavir news could push stocks higher
Lenacapavir is an HIV treatment that only requires patients to receive one injection twice a year. This is a significant change from the daily pill that many HIV patients take today. While injectable medications may be less desirable than oral medications, the frequency with which patients must administer them can make them a much-needed option.
At its peak, lenacapavir could generate more than $4 billion in sales. This would make it one of the company's best-selling drugs. Last year, only Biktarvy, another HIV drug (a daily pill), made more money, with sales of over $8.6 billion. The Food and Drug Administration accepted Gilead's new application for the drug lenacapavir earlier this year and scheduled the PDUFA for Dec. 27, meaning a decision on treatment should be made soon.
This positive news front could easily propel Gilead stock to new highs as it would open up huge growth opportunities for the company. And the company recently announced strong results.
The latest results are better than they look
In its third-quarter earnings report (for the period ended Sept. 30), Gilead's revenue disappointed by more than $7 billion and fell 5% year over year. But excluding the COVID-19 treatment, Veklury's sales rose 11%. Many industries are showing impressive growth.
Trodelvy Cancer Care, which is still in the early stages of growth, had revenue of $180 million for the quarter, up 78% from the same period last year. Gilead's cell therapy product sales rose 79% to $398 million, and sales of its hepatitis C drugs rose 22% to $524 million. Its core HIV business also generated revenue of $4.5 billion, up 7% year over year.
Gilead's business has been strong lately, and while expenses rose last quarter, primarily due to contract-related R&D costs (a one-time fee from a recent acquisition), the company's margins and operating practices have surprisingly improved . %. Revenues.
Investors also receive strong dividends
Gilead is also a good returnee. It gained 3.3%, nearly double the S&P 500 average of 1.7%.
The company has increased its payouts over the years, with the current quarterly dividend of $0.73 being higher than the $0.52 Gilead paid five years ago. And with Gilead's trailing-12-month free cash flow of $9 billion, Gilead is in a good position to keep increasing its payout, which has cost the company $3.7 billion over the trailing 12 months. Gilead's earnings don't appear to be in jeopardy, and this is a boost investors can count on for the foreseeable future.
Gilead is still a good buy today
At 34 times earnings, Gilead stock looks expensive (the healthcare industry average is 23), but it's also high as the company's recent earnings report, which said research and development costs have risen, weighs on earnings Has. Based on analyst forecasts, Gilead is trading at a multiple of 13 times future earnings, down from the industry average of 17.
Although Gilead has appreciated in value, it's still an investment that offers investors a lot of value and could be a great stock to own in 2023. Given its earnings, the company's growth, and the potential that lenacapavir has to offer, the stock could be a solid and profitable dividend for your portfolio for years to come. .
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David Jagielski has no position in any of the stocks mentioned. The Motley Fool has a mission and recommends Gilead Sciences. The Motley Fool has a disclosure policy.