Picking Apart Gilead Ahead of Earnings (GILD)

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After today’s close, we’ll get to see earnings out of Gilead Sciences Inc. (NASDAQ: GILD). The estimates for the biopharmaceutical company from First Call are $0.48 EPS on $1.22 billion in revenues.  Next quarter estimates are $0.45 EPS on $1.22 billion in revenues. Estimates for fiscal Dec-2008 are $1.90 EPS on $5.08 billion in revenues.

Analysts have an average price target north of $54.00.  Interestingly enough, options traders appear to only be expecting a move of up to $1.40 to $1.55 in either direction.  At $51.80, shares are incredibly higher than the 200-day moving average of $43.61 and also well above the 50-day moving average of $47.97.

Gilead’s regiments for treating AIDS, HIV, Flu, hepatitis, bacteria, hypertension, and more have all quietly helped the company become a biotech giant with a market cap of $48 Billion after a 10-fold to 20-fold return this decade.

Gilead has a habit of beating earnings expectations overall, andanalysts have taken its earnings estimates higher during a time whenmost sectors are seeing analysts lower estimates.  While this has seena major stock performance, it is expected that the company will have16% earnings growth and 18% revenue growth from 2008 to 2009.

Gilead Sciences Inc.’s 52-week trading range is $35.22 to $53.20.  After seeing a major return in the company this decade with very few disappointments, it would be easy to try picking apart the company in the currently more cautious environment. But its performance and growth so far have spoken for themselves, and all of its treatments seem to be protected from the economy along with most biotechs.

Jon C. Ogg
April 16, 2008

Jon Ogg produces the Special Situation Investing Newsletter.  He can be reached at jonogg@247wallst.com and he does not own securities in the companies he covers.