Gilead Sciences Headed for New Highs

by Sam Collins | February 12, 2013 1:21 am

Gilead Sciences (NASDAQ:GILD[1]) — This large-cap biotech is well-positioned to gain market share. On Nov. 19, at $74 (split $37), the Trade of the Day[2] said, “In September, the stock rallied to new highs after rival Bristol-Myers Squibb (NYSE:BMY[3]) suspended its trial of a competing hepatitis C treatment. And last week, the stock gapped up to a new all-time high resulting from positive results from a study for its hepatitis C treatment.”

Since the important announcement of the positive Hepatitis C treatment in November, analysts have increased their estimates. (All estimates and prices have been adjusted for a 2-for-1 split that occurred on Jan. 28.) Since then, operating margins are estimated at 46.3% in 2013 and 50.6% in 2014. New adjusted consensus estimated earnings per share (EPS) are $2.04 for 2012 and $2.76 for 2013, and the mean 12-month price target is $47, based on an expected price/earnings ratio (P/E) of 18.5.

Technically, the stock is in an orderly bull market characterized by breakouts and breakaway gaps. Strong support exists at its 50-day moving average and bullish support line, both at $38.25.

Each breakout has resulted in a new high followed by a short-term consolidation. Buy under $40 for a trading target of $48. Longer-term buyers could see much higher prices.

GILD Chart
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Trade of the Day Chart Key

  1. GILD:
  2. Trade of the Day:
  3. BMY:

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