If you are buying into Gilead Sciences' (GILD)
better-than-expected earnings, be ready to ride the dividend, because you won't
see price growth this year. That's my view, at least. -. The company's third
quarter results showcase my point. Despite beating analyst's views, revenue and
earnings both fell. I don't really care if a company beats estimates if its
profits still drop 22%. That's plain bad.
With the market corrections taking place, I don't see Gilead
making any runs this year. They have a ton of cash, but haven't put it to use
yet. All that said, I think hepatitis sales are so low at this point that
revenue should start to stabilize. To that end, Gilead is a cheap stock with a
nice dividend.
As the company's once-coveted hepatitis C drugs continue to
decline in sales, profits continue to falter. It's been one of the most
straightforward revenue declines I've ever watched. Every quarter, Harvoni is
down. Look at the annual financials. Every year, sales and net income dip. This
year, as the company works to build new outlets for growth, they've allowed
expenses to keep gaining even as sales decline. In the first nine months of the
year, costs and expenses have increased 11.4% to $9.27 billion, while revenue
fell 18.9% to $16.33 billion. Operating income is down 40% for the year to $7
billion; while third-quarter operating income dropped 31% to $2.62 billion.
Of course, earnings have followed suit. Third-quarter net
income fell 22.6% to just under $2.1 billion. On that income, diluted earnings
per share decreased a comparable 22.1% to $1.62 per share.
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