How to Buy Gilead Stock in 2020

Gilead Sciences (NASDAQ:GILD) is a hundred-billion-dollar leading biotech company based in the United States. A historical leader in the treatment of HIV and Hepatitis C, Gilead has featured prominently in the news recently following encouraging signs of its Remdesivir drug – proposed for the treatment of Covid-19 symptoms.

Gilead’s history of innovation and its strong financial track record has made it a historically attractive company for investors.

Thinking of buying Gilead stock today? In this guide, we’ll walk you through the process of how to buy Gilead stock and review some elements to consider in your investment decision!

3 Simple Steps to Buy Gilead Stock

Don’t have time to read our guide? Simply follow these 3 simple steps to buy Gilead stock!

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Where To Buy Gilead Stock

How To Buy Gilead Stock Using eToro

Step 1: Search for Gilead (GILD) stock

Use eToro’s search function to find Gilead stock. While stocks & other traded instruments appear first, you can also use the search bar to look for experienced traders on the platform that may wish to copy (social trading).

Step 2: Click on “Trade”

When you are ready to invest your own money, make sure that you are using your “Real” portfolio and not the “Virtual” free demo account!

Step 3: Select your order type, the amount and the options you want

Once you’re in the “Trade” menu, you can decide to buy (or sell!) a number of shares or a specific dollar amount. You will then see how much of your equity the trade represents. You can then specify the leverage, the order type and the options you want (if any).

On eToro, long and non-leveraged stock trades are executed directly and short or leveraged trades are made by trading CFDs.

Before buying or selling, make sure to conduct your own thorough research, particularly if you are using leverage!

When you are ready, click “Open Trade”.

 

Company Background

Gilead Sciences is a leading American pharmaceutical and biotech company. Founded in 1987, it is listed on the NASDAQ exchange and is headquartered in California.

Gilead researches and commercializes a wide variety of drugs used in the treatment of HIV, cancer, hepatitis B and C, hypertension, arthritis, and influenza. More recently, Gilead has grown through acquisitions to strengthen its presence in the highly lucrative immunology and oncology markets.

Several of its blockbuster drugs (Sovaldi and Harvoni for Hepatitis C, Genvoya and Truvada for HIV, etc.) have become market leaders and reached several billion dollars in annual sales.

At the time of writing, Gilead had a market capitalization in excess of $100 billion.

 

Gilead Stock Performance

Gilead had a strong start for 2020 (over +25% YTD), mostly due to soaring sales in its leading HIV treatment drug Biktarvy and speculation around the effectiveness of Remdesivir. The possible approval of its Filgotinib drug for Crohn’s disease and arthritis, currently in Phase 3 clinical trial, is another source of investor enthusiasm.

Recently, the stock has been very volatile, fuelled by speculation over the effectiveness and approval likelihood of its Remdesivir drug to combat Covid-19 symptoms. While the drug showed promise in a first set of studies, “leaked” recent results may not be as encouraging. Clinical trials are still ongoing, and Gilead has not yet obtained the green light to use it on patients infected with the novel coronavirus.

Gilead still trades below its peak of nearly $120 per share, with upside or downside potential heavily linked to the demand for its existing drugs and the likelihood of success of its new drug pipeline.

At the time of writing, the analyst consensus was split between “Buy” and “Hold”, with price targets from leading equity research analysts between $75 and $89.

 

Why Invest in Gilead Sciences?

As a biotech company, Gilead’s future depends on its ability to keep selling branded drugs before their patents expire and to obtain approval for marketing new drugs.

The global biotech/biopharma industry is split between 30+ billion-dollar companies, with patented drugs whose annual sales can reach in the billions of dollars, and a myriad of startups and medium-sized companies whose value depends on their ability to discover & market groundbreaking new drugs.

Gilead is a market leader and ranks in the top 15 largest biotech companies by revenues, with both a large portfolio of existing branded drugs and many promising new ones in the pipeline.

Below, we list 4 aspects that make Gilead an attractive stock to buy:

1. Strong & profitable track record

With $22.5 billion in 2019 revenues (+2% year-on-year), Gilead is one of the largest pharmaceutical companies in the world. Two-thirds of its 2019 revenues come from HIV drugs, and ~17% from Hepatitis C drugs, with the remainder coming from other treatments.

In 2019, Gilead Sciences respectively posted 29% and 23% EBITDA and EBIT margins, which are well above the sector median. Its 24% profit margins, 8.6% return on assets and 24.5% return on equity further underline Gilead’s strong profitability and returns.

Last, Gilead in 2019 generated healthy cash flows, with $9.1 billion in operating cash flows, and $2.3 billion in levered free cash flows (i.e. cash flows after interest payments & debt service).

Naturally, Gilead’s profits and cash flows have not been stable over time, primarily because of the expiry of old patents. Nevertheless, Gilead’s track record of innovation gives investors good hopes for future growth.

2. Growth opportunities

While the bulk of Gilead’s revenues come from its existing blockbuster drugs, its own R&D pipeline is robust and it has been partnering with several other biotech firms like Galapagos (NASDAQ:GLPG) to build its immunology offering. This partnership should not only give Gilead access to a new R&D pipeline, but also allow it to participate in the success of Filgotinib, Galapagos’ much-anticipated rheumatoid arthritis drug, and give Gilead better access to the European Market.

Gilead has also made several billion-dollar acquisitions in recent years (Forty-Seven in 2020, Kite Pharma in 2017) to develop a much stronger presence in the highly lucrative oncology drug market. While Gilead is not a historically strong player in this market, these acquisitions should help it diversify and grow.

Last, Gilead recently reported promising early results for Remdesivir as the treatment of a Covid-19 symptom, although the success and timeline of the subsequent trials remain highly uncertain.

3. Strong & growing dividend

Gilead has grown its dividend significantly in the past few years. Today, its dividend yield stands in excess of 3% and is forecasted to keep growing. Although the coronavirus crisis may affect the company’s decision, Gilead most recently announced an 8% increase in its 2020-Q1 dividend.

The dividend payout ratio remains below 60% and does not appear excessive, particularly given Gilead’s strong cash flows and massive cash pile. With $24 billion in cash and cash flow stability & visibility, until its patents expire, Gilead can easily afford its dividend.

4. Low leverage and investment-grade profile

Last, Gilead’s credit is considered safe, which may be of comfort to investors worried about the downside. At the time of writing, Gilead was rated A3 by Moody’s (middle of the investment-grade scale), thanks to its profitability and strong cash-generating abilities.

Thanks to its abundant cash, Gilead has almost no net debt ($24.5 billion in debt and $24.4 billion in cash). Last, its earnings before interests & tax (EBIT) amply cover interest expenses (4.3x).

Should I Buy Gilead Stock?

As discussed above, Gilead is a market leader in the biotech world and has many attractive qualities for the stock investor.

Ultimately, however, we cannot give you investment advice and the decision rests on your shoulders. Before investing, make sure to read carefully Gilead’s financial statements, its press coverage and (if you can!) the analyst commentaries. This way, you will not only understand the company and its prospects better but also properly identify the downside risks of holding the stock.

For more resources, make sure to consult our stock investing and stock trading guides!

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