Gilead Sciences’ Picture Just Keeps Looking Better (GILD)

GILD just beat the Street, the stock is getting higher analyst targets, and the technical picture remains appealing


Gilead Sciences (GILD) — We last reported on Gilead Sciences on July 7, but recent developments encourage me to update our opinion on this biotechnology stock.

GILD has been a favorite biotech since Nov. 19, 2012, at $37.50. I have “headlined” it several times and at various prices since then. S&P Capital IQ reiterated a “strong buy” rating on GILD stock on March 28, increasing its price target to $116 from $104, then in late April again raised the target — that time to $130. S&P’s consensus earnings estimate was for $6.31 per share in 2014 and $7.85 in 2015.

However, yesterday Gilead reported second-quarter earnings of $2.36, trouncing S&P’s quarterly estimate of $1.18. Thus, S&P has increased its 2014 earnings estimate to $8.80, and has increased its 12-month price target on GILD $150.

In late May, Gilead became the victim of biotech profit-taking and pressure from the FDA to lower the price of its principle drug, Sovaldi. Now, however, only three states do not provide reimbursement for Sovaldi, down from seven. A bullish “V” was completed on July 2, and the resistance at just under $85 broke.

We are retaining our cup-and-handle trading target of $105. However, long-term investors could reap S&P’s new 12-month target of $150.

Buy GILD at the market.

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