Biotechnology company Gilead Sciences (NASDAQ:GILD) wasn’t a “Magnificent Seven” company or a darling of the financial markets in 2023. Yet, GILD stock deserves a long-overdue rally in 2024. Gilead Sciences is doing important scientific work, and the company’s financials are fairly solid.
Sure, weight-loss products deserve attention, but analysts and investors seem to be obsessing over them lately. Meanwhile, Gilead Sciences is making headway with critical, potentially lifesaving treatments. So, if you like to own stocks that aren’t on the front page of the financial headlines today but could be standout stars soon, consider Gilead stock.
GILD Stock: Get Value and Yield With an Earnings Beater
If 2024 is the year when value finally matters again, Gilead stock could run far and fast. There’s a good value proposition here, as Gilead Sciences’ GAAP-measured trailing-12-month price-to-earnings (P/E) ratio is 17.84x. That’s far below the sector median P/E ratio of 31.35x.
What about passive-income investors? Gilead Sciences definitely respects you, as the company offers a forward annual dividend yield of 3.6%. In contrast, the healthcare sector’s average dividend yield is around 1.5%.
Still not convinced that you should give Gilead Sciences a chance? Here’s a fact that might impress you. For the third quarter of 2023, Gilead Sciences reported non-GAAP adjusted EPS of $2.29 per share versus $1.90 per share in the year-earlier quarter. Meanwhile, analysts had only expected the company to report EPS of $1.92 per share in Q3 2023.
Even after Gilead Sciences’ earnings beat, GILD stock still hasn’t made a big move. This seems to suggest that Gilead Sciences has been underappreciated for too long on Wall Street. Jason Ware, chief investment officer (CIO) at Albion Financial Group, predicted, “I don’t think [the] stock has a ton of downside,” and I agree 100%.
Gilead Sciences’ Quiet Progress
Weight-loss drugs are all the rage nowadays. However, Gilead Sciences is quietly but steadily demonstrating progress in other areas, including ones that could save people’s lives.
For example, Gilead Sciences’ Covid-19 therapy Remdesivir (sold as Veklury) was recently shown to have a synergistic effect against the Ebola virus when used with RedHill Biopharma’s (NASDAQ:RDHL) opaganib and RHB-107 (upamostat).
Also, the U.S. Food and Drug Administration (FDA) approved a label update for Gilead Sciences subsidiary Kite’s lymphoma treatment Yescarta (axicabtagene ciloleucel). This update comes on the heels of evidence that Yescarta improves the survival rate of certain large B-cell lymphoma patients.
Plus, research indicates that Yescarta has curative potential for certain patients with non-Hodgkin lymphoma. In addition, long-term data points to Yescarta yielding a high rate of durable response in selected patients with high-risk large B-cell lymphoma.
Gilead Sciences and Kite also reported progress in their battles against aggressive blood cancers and breast cancer. Furthermore, Gilead Sciences has a goal of ending the HIV epidemic permanently.
The point is that Gilead Sciences is conducting crucially important research and doing the legwork that won’t necessarily garner Wall Street’s attention. At the same time, this work presents a win-win scenario for the patients involved and for Gilead Sciences’ stakeholders.
An Inflection Point Could Be Imminent for Gilead Stock
Considering the crucial work that Gilead Sciences is doing, it seems that the company deserves more attention from investors. Logically speaking, Gilead stock ought to have rallied strongly in 2023.
However, things aren’t always logical on Wall Street. Sometimes, share-price rallies are delayed for good companies because the market is busy obsessing over other things. I expect that Gilead Sciences will have its day in the sun soon enough. So, feel free to buy and hold GILD stock, and patiently collect dividends while awaiting a well-deserved rally in 2024.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
