Gilead Science Case
University of La Verne
La Verne, CA
Prepared for Prof. Yibo Xiao
BUS 531 Investment & Portfolio Management
Investment Analysis Report
Gilead Sciences Inc. (GILD)
Mohamed Shabib
March 1st, 2014
College of Business and Public Management
Department of Business Administration
Executive Summary This report was written to analyze and examine whether investing in the Gilead Sciences Inc. stock is feasible. Nine main factors were used in reaching conclusions and recommendations, six of which are fundamental factors and three of which are technical factors, as follows:
Fundamental factors: Technical Factors:
1. Valuation Analysis. 7. EMA
2. Profitability Analysis. 8. MACD
3. Balance sheet Analysis. 9. Bollinger Bands …show more content…
In addition, the three ratios were compared to the industry average to gain insight on other competitors financial health performance compared to Gilead’s own performance. Exhibits 1.3 and 1.4 show the findings of this analysis. The debt/equity ratio for Gilead has experienced very slight change in the past 3 years increasing from 0.76 in 2012 to 0.77 in 2014. Although the increase is minimal it is an indication that the company is financing its equity using more debt than before. This could be of concern in the sense that Gilead is relying on debt to finance its equity activities. However, it could also be viewed positively, knowing that the company is trying to leverage its position and push for further stock price growth. The current ratio increased from 1.44 in 2012 to 3.07 in 2014, indicating an increase in Gilead’s current assets compared to its current liabilities, a further indication on the company’s overall positive financial health. With this increase in current ratio the company is much better able to cover its short term debt …show more content…
ROE for Gilead was 90.32% in 2014. Compared to Amgen’s 21.55% and Biogen’s 30.21% Gilead is doing much better in generating profits from equity investments. Both measures are a testimony to the company’s management performance. In addition to quantitative factors, qualitative factors also give positive indications regarding Gilead’s overall managerial performance. Recently, Gilead’s management succeeded in reaching deals with a number of European countries including Italy, and Spain whereupon the governments of those countries commit to higher purchasing volumes. In exchange Gilead will lower the prices on some of its expensive drugs like Sovaldi, which sells for $1000 a pill. John F. Milligan the company’s president and COO states “Italy has committed to volumes this year that I believe are about three times the volume they have ever treated.” The company’s managers have also been successful in obtaining approvals for the company’s new Harvoni drug in the US in 2014, and in the UK in 2015, and still awaits the highly likely approval of the drug from the EU. All of which will likely boost the company’s sales during 2015 to exceed the current $12.1 Billion figure.
Technical
La Verne, CA
Prepared for Prof. Yibo Xiao
BUS 531 Investment & Portfolio Management
Investment Analysis Report
Gilead Sciences Inc. (GILD)
Mohamed Shabib
March 1st, 2014
College of Business and Public Management
Department of Business Administration
Executive Summary This report was written to analyze and examine whether investing in the Gilead Sciences Inc. stock is feasible. Nine main factors were used in reaching conclusions and recommendations, six of which are fundamental factors and three of which are technical factors, as follows:
Fundamental factors: Technical Factors:
1. Valuation Analysis. 7. EMA
2. Profitability Analysis. 8. MACD
3. Balance sheet Analysis. 9. Bollinger Bands …show more content…
In addition, the three ratios were compared to the industry average to gain insight on other competitors financial health performance compared to Gilead’s own performance. Exhibits 1.3 and 1.4 show the findings of this analysis. The debt/equity ratio for Gilead has experienced very slight change in the past 3 years increasing from 0.76 in 2012 to 0.77 in 2014. Although the increase is minimal it is an indication that the company is financing its equity using more debt than before. This could be of concern in the sense that Gilead is relying on debt to finance its equity activities. However, it could also be viewed positively, knowing that the company is trying to leverage its position and push for further stock price growth. The current ratio increased from 1.44 in 2012 to 3.07 in 2014, indicating an increase in Gilead’s current assets compared to its current liabilities, a further indication on the company’s overall positive financial health. With this increase in current ratio the company is much better able to cover its short term debt …show more content…
ROE for Gilead was 90.32% in 2014. Compared to Amgen’s 21.55% and Biogen’s 30.21% Gilead is doing much better in generating profits from equity investments. Both measures are a testimony to the company’s management performance. In addition to quantitative factors, qualitative factors also give positive indications regarding Gilead’s overall managerial performance. Recently, Gilead’s management succeeded in reaching deals with a number of European countries including Italy, and Spain whereupon the governments of those countries commit to higher purchasing volumes. In exchange Gilead will lower the prices on some of its expensive drugs like Sovaldi, which sells for $1000 a pill. John F. Milligan the company’s president and COO states “Italy has committed to volumes this year that I believe are about three times the volume they have ever treated.” The company’s managers have also been successful in obtaining approvals for the company’s new Harvoni drug in the US in 2014, and in the UK in 2015, and still awaits the highly likely approval of the drug from the EU. All of which will likely boost the company’s sales during 2015 to exceed the current $12.1 Billion figure.
Technical