Gilead Sciences, Inc. (NASDAQ:GILD) — I have been recommending GILD stock since November 2012, when it was trading near $37 (split adjusted). My most recent update on this biotech favorite was on Dec. 30, with shares trading just under $98.
GILD stock jumped 1.9% on Monday following news that the company entered into an agreement with Mylan Inc (NASDAQ:MYL), which will be the exclusive distributor for its hepatitis C drugs, Sovaldi and Harvoni, in India.
S&P Capital IQ expects 2015 revenue will increase 11% to $27.6 billion, driven by sales of the two drugs, and operating margins will increase to 68.3% from 66.6% in 2014. The firm reiterated its “strong buy” opinion on GILD stock following strong Q4 results earlier this month. Its analysts also raised their 12-month price target to $143 from $135.
Gilead said it plans to pay a quarterly dividend of $0.43 per share, which represents a forward annual yield of 1.6%, and approved a new five-year, $15 billion share buyback plan.
After breaking from a consolidation in July at $85, GILD stock ran to an all-time high at almost $117 in late October. Since then, shares have been consolidating in a right triangle. The price is now at the apex of the triangle, and a push above $105 could result in a major breakout.
Two selling climaxes, one in December and another in early February, mark the support line of the triangle, along with its 200-day moving average at $97.
A break through $105 should provide a trading target of $117 for a gain of more than 11%. Traders can enter a stop-loss order at $96.
I view GILD stock as a relatively low-risk purchase in the dynamic biotech sector. Those who hold it as a cornerstone investment could reap much higher profits.
