Be Ready to Ride the Dividend on Gilead Sciences


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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