Our Gilead stock price prediction shows gains ahead, even after Gilead Sciences Inc. (Nasdaq: GILD) shares have fallen more than 7% since the beginning of August.
You see, the Gilead stock price recently got caught up in a sell-off of biotech stocks as regulators continue to investigate companies for drug price gouging. That has caused all biotech stocks to fall, even when only several companies are being investigated.
But the stock price's drop has only made GILD stock more attractive.
Gilead produces the widely successful and effective hepatitis C (HCV) drug, Sovaldi. Approved by the U.S. Food and Drug Administration in December 2013, Sovaldi runs $1,000 a pill, or $84,000 for a full treatment.
While those huge retail prices grab headlines, the drug is very effective. Sovaldi and Gilead's newer version, Harvoni, cure 90% of HCV patients.
"That means patients can avoid the need for a liver transplant - an operation that runs $250,000 if an organ donor is found," Money Morning Defense & Tech Specialist Michael A. Robinson explained. "And that price doesn't include antirejection drugs and antibiotics people must take for the rest of their lives."
So the price of the drugs is expensive, but successful treatment can save patients' money and lives.
During its first quarter on the market, Sovaldi sales totaled $2.27 billion. That blew past even the most optimistic estimates and made it the largest HVC drug launch ever.
The previous record holder was Vertex Pharmaceuticals Inc.'s (Nasdaq: VRTX) hepatitis C treatment Incivek. Launched with great anticipation in May 2011, Incivek racked up $1.56 billion in sales during its first four quarters of sale.
Sales of Sovaldi totaled $1.29 billion in Q2 2015, beating analysts' estimates of $969 million. Sales of Harvoni, a combination of Sovaldi and another drug called ledipasvir, were $3.61 billion, above estimates of $3.5 billion. The pair's impressive drug sales were boosted by uptake in Spain, Italy, and Portugal.
Still, Gilead shares got roughed up as worries plaguing the entire healthcare industry pressured shares. The unease is that pharmacists, insurers, and patients will seek a cheaper alternative to Sovaldi. Amid that concern, GILD stock shed 11% in August alone.
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But those concerns have been overblown, as Robinson explains. And he sees the Gilead stock price climbing much higher from here...
Why We're Bullish on the Gilead Stock Price Now (NYSE: GILD)
One of the reasons we're so bullish on GILD stock is the huge increase in hepatitis C spending by the U.S. government.
"Medicare actually spent $4.6 billion on hepatitis C treatments in the first six months of this year," Robinson said. "That's almost as much as the agency spent in all of 2014. Gilead accounted for 66% of all covered prescriptions. Simply put, Gilead dominates the HCV sector."
"Gilead's two HCV products account for about 60% of its revenue and generated in $4.8 billion in revenue in Q3," he continued. "Overall, the products brought in $12.5 billion in 2014 and $9.5 billion in the first six months of 2015, making the duo among the most successful new drugs ever launched."
Yet Gilead's value stretches beyond its lucrative HCV treatments.
Gilead's pipeline includes 11 drugs under development for blood diseases and cancer, and seven more for respiratory problems and anti-inflammatories. Collectively, the company has roughly three dozen drugs under development.
Additionally, Gilead's $16 billion cash stash and $10 billion raised through a recent bond sale at low interest rates mean acquisitions to expand scale and reach are a distinct possibility.
Since April 2014, Gilead has gained 66.5%. That's more than four times that of the S&P 500. Year to date, the Gilead stock price is up 15.80%, handily better than the S&P's 2.37% advance.
According to Robinson, that 66.5% gain is just the start for the Gilead stock price.
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