Gilead Sciences Inc. (GILD)

He likes it a lot and owns it for clients. It is a great complement to CELG-Q. GILD-Q had a weak earnings report the other day. They dominate the HIV market and the HEP-C market. He does not know where the earnings are going, but they have done a great job with the cash on their balance sheet. He likes it a lot.

Sell? He is not wild about pharmas right now. You should also think of this in the context of your overall portfolio and speak to an advisor. He would hope you have something that has a significant gain so that you could use this as a loss to offset it. He would just take his lumps.

(Top Pick Feb 4/16, Down 14.47%) It is getting closer to EBV +5 ($65) every day, which is where it is going. There is 89% upside to his model price. He likes the drug space as it is cheap. You kind of have to be in this group.

There has been a lot of news about the HEP-C losing some of the offerings, lots of competition. It has in the low teens of drugs in phase III trials so it looks really good for the second half of 2017. There are not many risks here. (Analysts’ target: $94).

A low price can get lower and a high price can get higher. Don’t rely on 52 week highs or lows as a cap. It is a one product company with competition coming at them aggressively. They are putting away a lot of cash. If they made an acquisition there would be opportunity. He would look elsewhere, but it does not mean there could be a transformational deal.

The sector is trading at 14-14.5 times, while this company is trading at about half that multiple. From that perspective, it is screaming value. However, this was a 2-trick pony with hepatitis C and HIV. The hepatitis C has been slowly decreasing and HIV sales have been increasing, but not enough to offset the decline. Generating tremendous free cash flow, and he thinks the market has taken a bit of a wait and see attitude, to see how management is going to deploy this. The stock has a 2.5% yield, and he would like to see them bump the dividend. They would still have more room in terms of capital to put the money to work, to see where the next leg of growth is going to come from.

This has been a big disappointment over the last year. They’ve been hit on a couple of fronts. On their hepatitis C drug package, they have almost run out of the easy patients and the growth rate has slowed tremendously. They still have a very good pipeline in terms of HIV drugs, and also trying to build up an oncology pipeline. Stock trades at very, very low multiples, 7 or 8 times earnings. There is not going to be a lot of growth. Because of some of their high priced drugs, they really are in the target of Trump and drug pricing in the US.

Has never bought this because the stock price has been sluggish. He likes to see companies who have strong fundamentals as well as strong technicals. While this passes the sniff test in terms of strong fundamentals, there is just something there that the market is really not comfortable with. He would like to see the stock price perk up and some technical strength before wading in.

Manufactures very powerful drugs for hepatitis C and HIV. Trading at a very cheap valuation, about 7.5X next year’s earnings. They also have a pipeline of new drugs. Has cash which can be used for an acquisition. Given the cheap valuation and their strong franchises in their drugs, this is very compelling.

This is such a high quality and the valuation is so cheap. They have the leading compounds for Hep C and HIV treatments. The concern is that there is going to be some kind of price controls on these life-saving drugs, but what people fail to realize is that these drugs actually save costs in the system, because it keeps people out of the hospitals. This company has a very bright future as a real leader in the healthcare space.

This has 2 big drugs; Hepatitis C and HIV. The HIV drug is doing very well and continues to grow. The problem with the Hep C drug is that it cures, so revenue is coming down and the market is implying that the decline in revenue is going to be a lot faster. Secondly, the market is giving them no value for their existing HIV drug which continues to do well. They are also not getting any value from the fact that there are still a lot of people with hepatitis C, and they’ll need to use the drug. Zero value is being given to the pipeline even though they have some good products. A fantastic balance sheet with no debt. They have a lot of cash overseas, and if they are allowed to bring this back, there will be benefits. Trading at 7X earnings. Yield of 2.57%. (Analysts’ price target is $94.89.)

Trading at a pretty low PE multiple, but are experiencing a lot of competition on a few of their key branded drugs. There is not a lot of visibility going forward on what earnings are going to look like. The pharmacy industry seems to be going through a transition. We are seeing consolidation, because that is a way to grow where they can get synergies and cut costs. Not only does this have uncertainty regarding pricing, but are also experiencing competition in their own branded drugs.

It has been in decline for a number of years but looks like it is forming a base. (Analysts’ Target: $95). It looks like it is fairly attractive, but he would sell after it got to $90. If it keeps making lower lows and lower highs then you have to question it.

Had like this before, and is still okay with it. It is really a good company. The reason for the down side was mostly on their hep C drug that didn’t meet expectations. Competition came into the space and sales came down. The overall company is very, very strong. Thinks investors have priced in the downside at this point. Stock looks pretty good here.

(Top Pick Feb 4/16, Down 10.33%) His model price is $140. It is far too cheap right now. He would buy more at $62.