(GILD) Gilead Sciences – Earnings Report Posts Record-Setting Quarter

February 5th, 2010

Gilead Sciences, Inc (GILD) posted record sales last week and analysts continue to raise estimates. The double-digit growth rates are also coming at a great value.

Company Description

Gilead Sciences is a pharmaceutical company that makes new medicines for life-threatening diseases.

Record-Setting Quarter

On Jan 26 Gilead reported fourth-quarter results that included record sales of $1.8 billion, a 30% increase. Revenues came in just over $2 billion. This was a 42% increase and led to net income of $802 million, up from $560 million.

Earnings per shares were 90 cents, topping the Zacks Consensus Estimate by 8 cents. This was the sixth consecutive earnings surprise.

Buying Back

A few days after the earnings release, Gilead announced that it will repurchase up to $1 billion in its common stock. The program will go through January of 2011.

Estimates Surge

Since the report we have received 17 upward estimate revisions for this year. The Zacks Consensus Estimate for full-year 2010 is now $3.37, up from $3.15. Gilead analysts also raised forecasts for 2011, which no average $3.75, up 11 cents.

If met year-over-year growth rates will be 16% and 11%, respectively.

And a Solid Value

Shares of GILD are trading at 15 times this years consensus. The PEG ratio is a roughly 0.9 times. Gilead operates with a net profit margin of 38% and an ROE of 48%. Most companies in the industry post negative numbers for both metrics.

The Chart

Projected earnings for Gilead have been climbing consistently over the past 5 years. However, lately the share price has not kept up which makes for a great buying opportunity. Take a look at the chart below.

A chart for Gilead Sciences, Inc

Bill Wilton is the Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the market-beating Zacks Growth Trader service

Zacks Investment Research

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