Biopharmaceutical firm Gilead Sciences, Inc. (NASDAQ:GILD) will join the flood of corporate earnings arriving next week with its own second-quarter report after the close on Monday.
While GILD stock has been locked in a downtrend for the better part of the past year, the company’s earnings report could be the key to additional short-term gains as the shares look to extend their late-June lows.
Looking at the numbers, analysts are expecting both earnings and revenue to decline year-over-year for Gilead Sciences. The consensus has earnings slipping 4.1% to $3.02 per share, while revenue is expected to dip 5.4% to $7.8 billion.
That said, there are bullish murmurs within the brokerage community that Gilead Sciences earnings will come in stronger than expected. For instance, EarningsWhisper.com reports a second-quarter whisper number of $3.15 per share — putting results essentially flat with the same quarter last year.
In fact, Gilead Sciences stock is thick with bullish analyst sentiment. According to Zacks data, GILD stock has attracted 10 buy ratings and seven holds, with nary a sell to be found. Additionally, the 12-month price target of $110.37 is spot on, representing a premium of about 27.4% to GILD stock’s current trading range.
Click to Enlarge Options data is also quite bullish when it comes to Gilead Sciences’ earnings. Currently, the July/August put/call open interest ratio arrives at 0.72, with calls receiving favorable attention.
However, this ratio plummets to 0.52 in the weekly July 29 series, with calls nearly doubling puts among options most affected by Gilead Sciences’s quarterly report.
Overall, weekly July 29 series implieds for GILD stock are pricing in a potential post earnings move of about 4.9%. This places the upper bound at $90.75, while the lower bound arrives at $82.25.
Technically, Gilead Sciences stock has immediate support in the $84.50-$85 region from its 50-day and 20-day moving averages, with additional support at $86 and its 10-day moving average. Resistance lies near $90, with GILD stock’s 200-day trendline dipping into the area.
2 Trades for GILD Stock
Call Spread: The market is looking a bit top-heavy after rallying for nearly a week, but it you are looking to join the bullish crowd on GILD stock, an Aug $87.50/$90 bull call spread has potential At last check, this spread was offered at $1.01, or $101 per pair of contracts. Breakeven lies at $89.01, while a maximum profit of $1.49, or $149 per pair of contracts, is possible if GILD stock closes at or above $90 when August options expire.
Put Sell: With headwinds growing on Wall Street following the recent market rally, a more cautious approach may be warranted. Along those lines, a weekly July 29 series $79.50 put sell offers a somewhat less risky means of profiting from Gilead Sciences’s quarterly report.
At last check, the weekly July 29 series $79.50 put was bid at 33 cents, or $33 per contract. As usual, you keep the premium as long as GILD stock closes above $79.50 when these options expire. The downside is that should Gilead Sciences stock trade below $79.50 ahead of expiration, you could be assigned 100 shares for each put sold at a cost of $79.50 per share.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.
