Gilead Sciences, Inc. (NASDAQ: GILD)

Sector: Healthcare Industry: Drug Manufacturers - General CIK: 0000882095
Market Cap 182.62 Bn
P/B 9.64
P/E 606.72
P/S 7.14
ROIC (Qtr) 19.30
Div Yield % 2.33
Rev 1y % (Qtr) 2.97
Total Debt (Qtr) 24.94 Bn
Debt/Equity (Qtr) 1.16

About

Gilead Sciences, Inc., often recognized by its stock symbol GILD, is a prominent player in the biotechnology and pharmaceutical industry. This company has made significant strides in the development and commercialization of innovative medicines over the past three decades. Its operations span various life-threatening diseases, including HIV, viral hepatitis, COVID-19, and cancer. Gilead's primary business activities revolve around the discovery, development, and commercialization of these groundbreaking medicines. The company's reach extends to...

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Price action

Investment thesis

Bull case

  • Healthy cash reserves of 7.33B provide 2.61x coverage of short-term debt 2.81B, demonstrating strong liquidity position and minimal refinancing risk.
  • Operating cash flow of 9.67B provides strong 10.91x coverage of stock compensation 886M, indicating sustainable incentive practices.
  • Robust free cash flow of 9.16B exceeds capital expenditure of 505M by 18.14x, indicating strong organic growth funding capability.
  • Strong operating cash flow of 9.67B provides 1.64x coverage of SG&A expenses 5.89B, showing efficient operational cost management.
  • Robust tangible asset base of 32.25B provides 5.78x coverage of working capital 5.58B, indicating strong operational backing.

Bear case

  • Operating cash flow of 9.67B barely covers its investment activities of (3.18B), with a coverage ratio of -3.04, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 9.67B provides thin coverage of dividend payments of (3.98B) with a -2.43 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Investment activities of (3.18B) provide weak support for R&D spending of 5.86B, which is -0.54x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Cash reserves of 7.33B provide limited coverage of acquisition spending of (536M), which is -13.68x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • High receivables of 5.09B relative to inventory of 1.78B (2.85 ratio) suggests aggressive credit terms or collection difficulties, potentially masking revenue quality issues.

Peer comparison

Companies in the Drug Manufacturers - General
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 LLY ELI LILLY & Co 940.24 Bn 84.66 19.19 42.51 Bn
2 JNJ Johnson & Johnson 656.09 Bn 49.20 10.65 45.80 Bn
3 AMGN Amgen Inc 389.67 Bn 89.91 26.60 54.59 Bn
4 ABBV AbbVie Inc. 363.54 Bn 129.05 16.59 68.74 Bn
5 MRK Merck & Co., Inc. 320.49 Bn 202.84 7.87 41.37 Bn
6 NVS Novartis Ag 304.60 Bn 21.78 5.37 35.46 Bn
7 AZN Astrazeneca Plc 291.12 Bn 30.97 5.01 32.63 Bn
8 NVO Novo Nordisk A S 219.30 Bn 13.62 4.51 20.59 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 3.55 2.39
EV to Cash from Ops. EV/CFO 22.27 27.43
EV to Debt EV to Debt 8.34 6.41
EV to EBIT EV/EBIT 70.33 29.56
EV to EBITDA EV/EBITDA 33.75 21.95
EV to Free Cash Flow [EV/FCF] EV/FCF 23.92 39.77
EV to Market Cap EV to Market Cap 1.14 1.28
EV to Revenue EV/Rev 8.14 7.09
Price to Book Value [P/B] P/B 9.64 12.10
Price to Earnings [P/E] P/E 606.72 73.51
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 2.04 0.92
Dividend Payout Ratio % Div Payout % (Qtr) 48.20 65.92
Dividend per Basic Share Div per Share (Qtr) 3.14 2.81
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 42.60 37.42
Interest Coverage Int. cover (Qtr) 10.70 20.26
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 14.55 -9.54
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 45.52 96.72
Dividend Growth (1y) % Div 1y % (Qtr) 2.61 2.18
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 1,046.92 74.22
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 269.94 29.18
EBIT Growth (1y) % EBIT 1y % (Qtr) 832.05 66.23
EBT Growth (1y) % EBT 1y % (Qtr) 5,130.69 310.53
EPS Growth (1y) % EPS 1y % (Qtr) 6,410.00 352.41
FCF Growth (1y) % FCF 1y % (Qtr) -2.85 47.43
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 6.30 8.06
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.50 0.38
Cash Payout Ratio Cash Payout (Qtr) 0.39 0.27
Cash Ratio Cash Ratio (Qtr) 0.60 2.11
Current Ratio Curr Ratio (Qtr) 1.45 6.17
Debt to Equity Ratio Debt/Equity (Qtr) 1.16 -0.40
Interest Cover Ratio Int Coverage (Qtr) 10.70 20.26
Times Interest Earned Times Interest Earned (Qtr) 10.70 20.26
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 47.00 -13.61
EBIT Margin % EBIT Margin % (Qtr) 37.49 -10.56
EBT Margin % EBT Margin % (Qtr) 33.99 -25.71
Gross Margin % Gross Margin % (Qtr) 78.70 64.91
Net Profit Margin % Net Margin % (Qtr) 27.90 -34.99