outline
Gilead Sciences (hereinafter referred to as Gilead) is a very strong stock whose stock price has risen as much as 50% over the past year due to the strength of its HIV treatment portfolio and progress in its innovative pipeline, and has only fallen less than 10% despite the recent overall market decline.
Reasons for recent stock price fluctuations
Gilead's stock price underwent a temporary correction following the announcement of its fourth quarter 2024 earnings, but its long-term growth potential still remains. The main causes of stock price fluctuations are as follows.
- Meet performance expectations: Fourth quarter sales growth was solid at +7.1%, but did not meet the high expectations of some investors.
- Regulatory Risk: Concerns about $1 billion impact on HIV sales under the IRA law and uncertainty about European approval (Livdelzi)
- Possible pipeline delays: Uncertainty about success of eight Phase 3 trials
Gilead 4th quarter 2024 performance summary
Sales summary
Gilead continued to see strong growth in HIV, oncology, and liver disease in the fourth quarter of 2024. Fourth quarter 2024 results showed solid growth, with revenue of $7.57 billion (+7.1% YoY) and non-GAAP EPS of $1.90, exceeding consensus by $0.2.
Item2024 4QYear-on-year growth rateTotal sales $75.7B+7.1%HIV sales$37.7B+21%Oncology sales$3.55B+19%Liver disease sales$3.1B-EPS$1.90+10.5%Net profit margin 10.7%+4.4%p
The HIV segment remains a key growth driver for Gilead, with Biktarvy accounts for 70% of total HIV sales maintaining a strong position.
Profitability Summary
It's not just about growth in sales. Gilead's HIV lineup, which is the most important investment point, boasts an overwhelming operating profit margin of 70%.
SectorOperating profit margin in 2024HIV70%Oncology25%Liver disease15%Overall operating profit margin10.8%
Gilead's overall profitability is increasing due to the high margin structure of the HIV division. In addition, growth potential is expected through expansion of the new product portfolio and increased R&D investment.
What is the next generation of food?
Gilead will continue to invest actively in research and development (R&D) in 2025 and is focusing on strengthening its future competitiveness. In particular, achievements related to major pipelines such as Lenacapavir (an HIV prevention drug administered twice a year), Trodelvy (anticancer drug), and Livdelzi (liver disease treatment) were notable.
- Lenacapavir (HIV preventive agent administered twice a year)
- Demonstrated 100% infection prevention effectiveness in phase 3 PURPOSE study
- FDA approval expected in the second half of 2025 → Annual sales expected to exceed $2 billion
- Trodelvy (anti-cancer drug)
- Breast cancer → lung cancer indications are being expanded
- Phase 3 EVOKE-03 study (Keytruda combination therapy) results expected in 2025
- Livdelzi (liver disease treatment)
- Primary biliary cirrhosis (PBC) treatment
- FDA accelerated approval (August 2024), European approval expected (Q1 2025)
Stock level
Even the valuation is attractive. Even though the stock price soared by about 50% last year, it is still receiving high profitability and low valuation compared to the sector average.
IndicatorGILD Sector Average P/E Ratio9.78x18.0xEV/Sales (TTM)3.395.21EV/EBITDA (TTM)17.9520.38Sales Growth (Forecast)7.1%5.24%Diluted EPS Growth (Forecast)10.5%8.71%Total Profit margin48.85%38.81%ROE24.29%15.27%
At a 45.7% discount compared to the sector average, it may not be a bad choice considering the attractive valuation.
conclusion
Beyond leadership in HIV treatment, Gilead is also securing growth momentum in the fields of oncology and liver disease. The innovation pipeline (Lenacapavir, Trodelvz) is expected to drive growth in 2025-2026, and the current valuation is attractive, at a discount of more than 45% compared to the sector average.