Top Biotech’s Rebound Isn’t Close to Finished

GILD broke from a cup-and-handle with a trading target of $105


Gilead Sciences (GILD) — This has been a favorite biotech stock of minesince November 2012, when I recommended it near $37.50. I have covered it numerous times since then, most recently on May 14.

For the first quarter, Gilead reported non-GAAP diluted EPS of $1.48 per share versus an expected $0.91. For 2014, the consensus estimate is for earnings of $6.31 per share, versus $2.04 in 2013. Analysts expect $7.85 in 2015.

On April 23, S&P reiterated its “strong buy” rating on the stock, saying the company’s hepatitis C program “has achieved a dominant market position, complementing its market-leading HIV franchise.”

GILD was the victim of profit-taking in the biotech sector and pressure from the government to lower the price of hepatitis C treatment Sovaldi. S&P analysts said they believe Gilead will make “some pricing concessions” for Medicaid patients.

The stock made a bullish “V” bottom in April. Last week, resistance just under $85 broke, confirming a cup-and-handle with a trading target of $105. Long-term investors could reap much bigger gains.

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