July 8, 2007

Barron's Jumps on Gilead's Bandwagon

Barron's July 9 issue was bullish on Gilead, saying that the stock could "climb another 20 to 25% (this year), fueled by strong demand for both existing drugs and remedies now in the pipeline." Barron's also stated that earnings could reach $2 per share by 2009.
This should be music to investors' ears. What should be even more encouraging to investors is the position that Gilead is in. The Barron's article outlines Gilead's successes, which start obviously with HIV. The article states that about 70% of new Atripla patients are switchovers from Glaxo's Combivir and other drugs. That's great for Gilead as it squashes some of the idea that Atripla was going to cannibalize sales of its other HIV drugs.
Furthermore, Tamiflu is being stockpiled by many countries and international agencies in case of a flu pandemic. This should help growth continue, as Tamiflu royalties account for about 20% of Gilead's revenues. Also, I see this as a great benefit because it keeps the company diversified.
The company will also be further diversified going forward with the approval of Letaris. Barron's states that the market for pulmonary arterial hypertension is $2 billion. The acquisition of Myogen, which created Letaris, and Corus Pharma have put Gilead in great position according to Barron's. Lastly, Barron's says that the company could be looking to make more acquisitions with over $2 billion in cash on hand or even be a takeover target itself.
This article could be what Gilead investors needed to get the stock out of its summer hibernation.

--Disclosure: I am long shares of Gilead--