Should I Buy Gilead Sciences Stock in November 2022?


Gilead Sciences, Inc. (NASDAQ: GILD ) share price has risen from $61.45 to $80 since early October 2022 and currently stands at $79.46.

Gilead Sciences reported better-than-expected third-quarter results last week, and company management updated its financial guidance for fiscal 2022.

Gilead Sciences reports better-than-expected Q3 results

Gilead Sciences is an American biopharmaceutical company focused on the discovery and development of antiviral drugs for the treatment of HIV, hepatitis B, hepatitis C and influenza.

The company reported better-than-expected third-quarter results last week; Total revenue fell 5.1% year-over-year to $7.04 billion, while earnings per share share was $1.90 (+$0.47).

Gilead Sciences ended the quarter with about $4.7 billion in cash, up 8% from last year.

Total revenue fell less than expected (+910m USD) and it is important to note that total product revenue excluding Veklury grew 11% to 6.1bn. USD in the third quarter of 2022 compared to the same period in 2021.

Sales of its COVID-19 treatment Veklury played a significant role in the company’s business during the COVID-19 pandemic, but as we continue to see lower rates of COVID-19 hospitalizations, Veklury’s revenue fell 52% in the third quarter % to $925 M quarter.

The company’s management revised its full-year EPS to $3.35-3.55 from $2.90-3.30 and reported total product sales to be between $22.5-$22.8 billion, compared to $22.0 to $22.5 billions previously. Daniel O’Day, Chairman and CEO of Gilead Sciences said:

Rigorous execution of our strategy combined with a very robust portfolio has resulted in some great progress in 2022 and we look forward to building on that momentum for the remainder of the year and beyond.

From a fundamental perspective, Gilead remains well positioned for future growth, but potential investors should keep in mind that Gilead stock is not cheap at the current price.

With a market cap of $99.44 billion, Gilead is not undervalued, and compared to Viatris Inc. (NASDAQ:VTRS) , Gilead is more expensive on a price-to-sales basis.

On a price-to-sales basis (market cap/sales), Viatris shares trade at 0.72, which is several times lower than Gilead Sciences’ price-to-sales ratio, which trades at a P/E of 3, 66 .

It is also important to note that Pfizer Inc. (NYSE:PFE) trades at less than 3 times this year’s revenue and less than 7 times TTM EBITDA.

Gilead trades at nearly 8x TTM EBITDA, which is still attractive, but given the stock’s strong performance over the past few weeks, I’d wait for a lower price level.

The US Federal Reserve raised interest rates by 75 basis points for the fourth day in a row this Wednesday, announcing plans to accelerate the tightening cycle.

Fed Chairman Jerome Powell said at a press conference that the Fed still has work to do, and if the US stock market enters a more significant correction phase, Gilead’s share price could be at much lower levels.

Technical Analysis

Gilead Sciences’ stock price has been rising over the past few weeks, and for now “bulls” are ruling the price action.

The price has also moved above the 10-day moving average, which is definitely a positive sign; Still, investors should keep in mind that Gilead stock isn’t cheap at the current price.

Data source: tradingview.com

The current support level is $75, while $85 is the first resistance level. If the price goes below $75, it would be a sell signal and open the way to $70 or even below.

On the upside, if the price rises above $85, the next target could be $90.

Summary

Gilead Sciences last week reported better-than-expected third-quarter results, and company management updated its fiscal 2022 course, with financial guidance not coming cheap.

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