Gilead Sciences (NASDAQ: GILD) shares are advancing this January, and at the current stock price, this company is fairly valued, in my opinion. The company is moving in the right direction, and the positive news is that Morgan & Stanley upgraded its price target on Gilead Sciences.
Fundamental analysis: Gilead Sciences continues to expand its business
Gilead Sciences is an American biopharmaceutical company that focuses on researching and developing antiviral drugs used to treat HIV, hepatitis B, hepatitis C, and influenza.
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The company reported Q3 results in the last week of October; total revenue has increased by 17.1% Y/Y to $6.56B while Q3 GAAP EPS was $0.29 (misses by $0.96). Total revenue has risen above the expectations (+$260M), and the company has declared a $0.68/quarterly share dividend.
Gilead Sciences shares have advanced more than 14% in the 2021 year, and the current price stands around $67. Morgan Stanley raised its price target to $83 for GILD, and Gilead Sciences remains one of its top biopharmaceuticals picks for 2021.
Gilead Sciences has revised the FY2020 earnings outlook in the second week of January, and the company expects product sales to be around $24.3B vs. the prior outlook of $23B. Operating income should be about $11.65B while adjusted EPS is expected to be around $7 vs. previous guidance of $6.25-$6.60.
Gilead Sciences also expects growth in 2021 with higher than expected sales of Veklury (remdesivir). The company expects higher sales of its oncology assets together with contributions from HIV therapies based on lenacapavir.
Gilead Sciences continues to expand its business, and the company has agreed to buy MYR GmbH (German maker of hepatitis drug) in a $1.4B deal. The company also acquired Immunomedics (NASDAQ: IMMU) this September in a deal worth around $21B.
Positive information is that CEO Daniel O’Day said last week that Gilead Sciences is testing remdesivir to determine whether it effectively treats new coronavirus strains.
“Remdesivir works at the source in the cell where the virus replicates, and what we know is in these new variants, that part of the cell is not changing at all in fact. So, we fully expect remdesivir to be effective against these new strains,” said Daniel O’Day, CEO of Gilead Sciences.
Technical analysis: Gilead Sciences shares are advancing, and $70 represents the first resistance
Gilead Sciences shares are advancing at the beginning of this year, and with $83.9B market capitalization, this company is reasonably valued.
The critical support levels are $60 and $55; $70, $75, and $80 represent the resistance levels. If the price jumps above $70, it would be a signal to trade shares, and the next target could be around $75, but if the price falls below the $60 support level, it would be a firm “sell” signal.
Summary
Gilead Sciences shares are advancing this January, and at the current stock price, this company is fairly valued, in my opinion. CEO Daniel O’Day said last week that Gilead Sciences fully expects its remdesivir to be effective against coronavirus’s new strains. Gilead Sciences expects growth in 2021, while Morgan Stanley raised its price target to $83 for GILD.
