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Buy GILD Now Before Its Next Breakout

Gilead Sciences has a history of brief consolidations before making new highs


Gilead Sciences (GILD) — This has been a favorite biotech stock of mine since November 2012, when I recommended it near $37.50. I have covered it numerous times since then, most recently on Jan. 15.

S&P recently reiterated its “strong buy” rating and 12-month price target of $104. It cited the company’s hepatitis C program, which it says is “poised to achieve a leading market position, complementing its market-leading HIV franchise.” S&P estimates operating EPS for 2014 will be $3.10, up from $1.81 in 2013.

Technically, GILD is still in a powerful bull channel with immediate support at its 20-day moving average at $80. Resistance is at the top of its bull channel at $85. There has been consistently heavy buying, which easily absorbs any overhead, so the stock has a history of brief consolidations before making new highs. MACD is moving up from the bearish zone, predicting that a breakout is forthcoming.

Buy GILD at the market for a trade to $90. My 12-month target is $100.

GILD Chart
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Chart Key

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