What Is Weighing On Gilead Sciences, Inc. (NASDAQ:GILD)?

Biotech Stocks

Biotech is giving back almost 50% of its gains so far in this year as the new President-elect marked his first press conference to bash the drug industry. Analysts consider that this populist outburst is more smoke than fire, and the decline in popular stocks should be used to add a few shares to core holdings in the biotech industry. One of these holdings is Gilead Sciences, Inc. (NASDAQ:GILD).

The highlights

The pharma and biotech sectors saw a red close after The Donald Trump went after the drug industry while marking his first press conference. There have been a lot of questions pertaining Gilead Sciences of late, provided this one-time biotech outperformer has been a laggard in the drug market for 2 years now. This is regardless of being the market lead in both the hepatitis C and HIV markets and generating around $21 billion in free cash flow in the past five quarters.

Gilead Sciences can hike the dividend amount in 1H2017. It is quite obvious as the firm has said it will focus less on stock buybacks than ever before. It increased the dividend by 10% in 2016 and made the new distribution in June 2016. Analysts consider that this type of increase is just the “floor,” and Gilead can report a 10-20% increase in its dividend in the first quarter. The shares price currently yields 2.5%, and the market would not be amazed if, after the payout growth, it yields 3% at these trading levels.

In the coming year, Gilead can be more active with mergers and acquisitions. Management has made repeated comments lately about the need to seek strategic acquisitions in the range of $1 billion to $5 billion. The firm is also getting mounting pressure from shareholders and analysts to advance a growth engine outside its main HIV franchise, which as of now is moving nicely, and change the story around the dropping revenues from its hepatitis ā€˜Cā€™ franchise.


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