Gilead Sciences, Inc. (GILD) Is A Hail Mary: 3 Better Stocks To Consider

After a strong 2015, health care stocks are leading the way lower in 2016. And it’s been an even uglier year for biotechnology company Gilead Sciences, Inc. (NASDAQ:GILD), which is down 25.2% (Note: our complete sector/industry performance rankings are available here).
This article provides a review of why we believe owning Gilead is a high risk Hail Mary pass (i.e. Gilead’s growth prospects are not good), and we then review three stocks we consider more attractive.
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Gilead’s Profits Are Evaporating:

 

Gilead Sciences, Inc. (NASDAQ:GILD) is a research-based biopharmaceutical company. It has several blockbuster drugs within its two largest product lines that treat hepatitis (Harvoni and Sovaldi) and HIV/AIDS (Truvada and Altripa). Impressively, the company has a large profit margin (close to 50%), it offers an attractive 2.6% dividend yield, and its dividend payout ratio is amazingly low at only 16.4%. However, growth is slowing and competition is beginning to creep in. Specifically, Gilead will experience a couple big patent expirations in 2018 and 2021, generic competition is on its way, and revenues are already declining as shown in the following chart.

 

Making matters worse, Gilead’s pipeline is being nurtured, but it is highly uncertain, and the company may need to look to costly inorganic acquisitions to achieve significant growth. For reference, the 5-year EPS growth estimate for Gilead is negative 0.7% (this is especially unattractive compared to some of Gilead’s peers as we’ll cover later). For reference, the following table shows Gilead’s declining sales and large dependence on hepatitis (HCV) and HIV drugs.

Also, this next charge provides details on Gilead’s pipeline.
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