Why Gilead Is Cheapest Large-Cap Biotech Despite Some Not So Favorable Acquisitions

Even after spending over $40 billion in the past five years on acquisitions, none of the deals for Gilead Sciences Inc GILD has delivered the blockbuster in cancer as it looked to venture away from the HIV franchise.

But, the upshot is that the stock is one of the cheapest in the large-cap biotech and pharma sector, writes Wall Street Journal.

2024 sales estimates for Trodelvy, added via a $21 billion buyout of Immunomedics, have been lowered from $2.2 billion to $1.7 billion in recent months, as results from the breast-cancer drug fell short of analyst expectations. 

Related: Gilead Sciences' Trodelvy Study In Breast Cancer Meets Primary Endpoint.

Data on blood-cancer treatment Magrolimab, which Gilead added via the $4.9 billion Forty Seven acquisition, looked "equally unimpressive," wrote an analyst at Baird.

WSJ also notes that Gilead's expensive $12 billion acquisition of Kite Pharma seems to be now paying off. Sales are expected to exceed $1 billion this year easily.

Related: Gilead's Yescarta Scores FDA Approval As First CAR T-Cell Therapy For Earlier Lymphoma.

A Gilead spokesperson wrote, "with more than 50 active or planned trials by the end of next year, the company expects its oncology revenue to represent more than one-third of total revenue by 2030."

According to the report, Gilead should focus on smaller bolt-on deals. In a recent conference, Merdad Parsey, the company's chief medical officer, told Michael Yee from Jefferies that future deals "will not come with an enormous price tag."

Additionally, the high-yielding stock offers a haven in the current bear market thanks to a stable HIV business.

The yield of nearly 5% effectively creates a floor for the shares, which aren't likely to dip below the low $50s, says a BMO analyst.

Price Action: GILD shares are down 2.19% at $57.86 during the market session on the last check Tuesday.

Photo via Wikimeidia Commons

Posted In: BiotechLarge CapNewsHealth CareGeneral

Ad Disclosure: The rate information is obtained by Bankrate from the listed institutions. Bankrate cannot guaranty the accuracy or availability of any rates shown above. Institutions may have different rates on their own websites than those posted on Bankrate.com. The listings that appear on this page are from companies from which this website receives compensation, which may impact how, where, and in what order products appear. This table does not include all companies or all available products.

All rates are subject to change without notice and may vary depending on location. These quotes are from banks, thrifts, and credit unions, some of whom have paid for a link to their own Web site where you can find additional information. Those with a paid link are our Advertisers. Those without a paid link are listings we obtain to improve the consumer shopping experience and are not Advertisers. To receive the Bankrate.com rate from an Advertiser, please identify yourself as a Bankrate customer. Bank and thrift deposits are insured by the Federal Deposit Insurance Corp. Credit union deposits are insured by the National Credit Union Administration.

Consumer Satisfaction: Bankrate attempts to verify the accuracy and availability of its Advertisers' terms through its quality assurance process and requires Advertisers to agree to our Terms and Conditions and to adhere to our Quality Control Program. If you believe that you have received an inaccurate quote or are otherwise not satisfied with the services provided to you by the institution you choose, please click here.

Rate collection and criteria: Click here for more information on rate collection and criteria.