Gilead Sciences, Inc. (GILD) — I last reviewed this stock on Oct. 28, at $113.25, but it has been featured as the Trade of the Day numerous times over the past two years. It has consistently surpassed my targets and outperformed its peers, and it remains one of my favorite biotech stocks.
The company reported big gains in third-quarter revenue and earnings. But S&P Capital IQ’s analysts noted that EPS of $2.05 was $0.41 below their estimates. And while sales of Gilead’s lead drug, hepatitis C treatment Sovaldi, were strong, they were also below their forecasts. This was due to patient delays in anticipation of FDA approval of the companion drug Harvoni.
Harvoni was approved in October. Capital IQ said it sees a reacceleration of hepatitis C drug sales in the fourth quarter and 2015, with more physicians prescribing Harvoni and a faster adoption rate.
Its analysts lowered their 2014 EPS estimate by $0.51 to $8.29, but they maintained their “strong buy” rating and $150 price target.
On Oct. 31, GILD stock peaked at $116.83 before pulling back while still retaining its strong uptrend. Immediate support is at its 50-day moving average, slightly over $105. However, I believe that line will break and shares will continue to decline to at least $95, where I would recommend buying them.
My initial trading objective is a return to the October high of $116. Investors should buy GILD stock as a cornerstone holding of an aggressive biotechnology portfolio for Capital IQ’s 12-month target of $150.
