Gilead’s HIV Growth Supports Valuation as Acquisition Costs Cloud Earnings

Gilead Sciences has outperformed the S&P 500 this year, while its normalized forward price-to-earnings ratio stands at about 15.5, according to Yahoo Finance figures cited by Insider Monkey. The article argues the valuation depends on whether Gilead can sustain growth and deliver returns from its acquisitions.

At Friday’s close, Gilead shares traded at $151.17, up 2.77% from the previous close. The article said the stock had gained more than 24% since the start of the year, compared with a 14% return for the S&P 500.

Gilead’s second-quarter revenue rose 10% year over year to $7.8 billion. HIV product sales increased 12% to $5.7 billion, while Trodelvy sales climbed 26% to $457 million. The company also received FDA approval for Yeztugo and Trodelvy for certain patients with breast cancer.

Acquisition-related in-process research and development charges totaled $11.2 billion in the quarter. Gilead said the charges accounted for about $9.08 per share of its $8.45 reported diluted loss per share.

The article describes the HIV business as a support for Gilead’s valuation, but says the company’s growth case also rests on newer products and acquisitions. It notes cell therapy sales fell 14% in the quarter, with competition cited as the main reason.