Key Points
Shares of Gilead Sciences (NASDAQ: GILD) have lagged the S&P 500 average this year, rising only 9% despite strong financials and a pipeline that promises to elevate the pharmaceutical company’s base beyond its core of HIV therapies.
Gilead has spent heavily on its acquisitions of Arcellx, Ouro Medicines, and Tubulis, and while it will take time to integrate them, the upside is that they add to the company’s pipeline, particularly in oncology and inflammation therapies.
In its first-quarter presentation, the company said it has four potential launches this year. Instead of focusing on the cost of its purchases, investors would do well to look beyond that and see how these new launches and acquisitions will diversify Gilead’s platform, reducing its reliance on its HIV franchise.
Three reasons to buy Gilead right now:
The company’s continued financial strength
In Q1, Gilead reported revenue of $7 billion, up 4% year over year, mainly from higher sales of its HIV products. Earnings per share (EPS) were $1.61, up 54.8% over the same period last year. It’s not as if the company’s HIV therapies are slowing down. Biktarvy and Descovy continue to dominate market share, driving a 10% year-over-year increase in HIV product sales to $5 billion.
The company is also seeing significant growth in its breast cancer drug, Trodelvy, with sales up 37% year over year. This dependable revenue gives it product gross margins of roughly 79%. The company said it sees no major loss-of-exclusivity patent cliffs for its top drugs until 2036. This means at least another decade of secure cash flows to fund research and development and dividend growth.
High-impact 2026 commercial launches
The primary reason to look at Gilead right now is its massive, immediate product-launch calendar.
Bulevirtide was given accelerated approval on May 22 by the Food and Drug Administration (FDA) as the first treatment for adults with chronic hepatitis delta virus (HDV) infection who do not have cirrhosis (severe liver scarring) or who have compensated cirrhosis. The FDA on April 29 granted Priority Review for a once-daily, single-tablet combo regimen of bictegravir + lenacapavir (BIC/LEN) for adults with suppressed HIV, with a critical Prescription Drug User Fee Act (PDUFA) action date set for Aug. 27, and launch expected shortly thereafter.
With its purchase of Arcellx, the company gains multiple myeloma therapy anito-cel, a BCMA CAR-T therapy with a PDUFA date scheduled for December. Trodelvy also continues to gain ground, with FDA approval on June 24 that allows it to move into crucial first-line metastatic triple-negative breast cancer (mTNBC) indication.
In addition, Gilead’s twice-yearly injectable HIV prevention drug, Yeztugo, has entered its multimarket launch curve following a strong clinical performance, and the company said it expects $1 billion in 2026 sales from the drug.
The price is right, and so is its dividend
Despite a strong five-year run and solid operational execution, Gilead’s valuation remains highly attractive, trading at around 15 times forward earnings, well below its five-year average.
For income-oriented investors, Gilead pairs this growth inflection with a reliable 2.39% dividend yield at its current share price. The company has increased its dividend for 11 consecutive years, including a 3.7% bump this year.
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James Halley has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Gilead Sciences. The Motley Fool has a disclosure policy.
