Gilead Sciences (NASDAQ:GILD) Expands its Focus Beyond Covid

The race to a vaccine for the novel coronavirus that shut down so much of the nation and left us all a little bit more wary than we were this time last year is tightening up, and Gilead Sciences (NASDAQ:GILD) isn't exactly at the front of the pack right now. Its remdesivir treatment has shown very positive signs, but it's also quite expensive and is more of a therapeutic than a vaccine. In the therapeutic market, it's got stiff competition from drugs that have been around for decades. But Gilead isn't just remdesivir; it's got several new angles to pursue that should make sticking with Gilead a smart plan in the end.

Possibly the Worst of Possible Solutions

Remdesivir has done some impressive things in the fight against coronavirus, but at $3,120 for a typical treatment plan for someone with standard commercial insurance, and a government cost of $2,340 a treatment, it's got a hefty price tag to go along with it. When 11 separate state treasurers get together to implore you to reduce prices, however, you know you've got a shaky alternative.

Since it's been shown to work, however, it's joined the arsenal of solutions against the novel coronavirus, and even now, Gilead is working on improving its overall efficacy. For instance, the company has already set up trials for remdesivir by IV for outpatient operations, which should hopefully keep high-risk cases from getting into hospitals to begin with. An inhaled version is also being considered, and some reports suggest that remdesivir in conjunction with Lilly's baricitinib has yielded some positive results, mainly a “median recovery time” reduced by an average of one day.

Again, though, it's going to have a long way to go against currently-available treatments like the controversial hydroxychloroquine / azithromycin / zinc package and the less-controversial but also less-noted dexamethasone. This is particularly true when you look at treatment costs.

There's More Than Just Remdesivir Here

We've pointed this out before, but it bears repeating: there's more to Gilead Sciences than remdesivir, and considering all of these items together gives you the best overall picture of the stock's health. Gilead recently arranged a deal to buy Immunomedics (NASDAQ:IMMU) in a deal valued at $21 billion. The deal's price tag, meanwhile, has left some convinced that Gilead will have to get substantial return for this to not end up a loss, with some calling the necessary revenue projections “heroic”. Yet with Immunomedics offering up, among other things, a breast cancer treatment drug called Trodelvy, there's a potential for those “heroic” projections to hit.

Moreover, Gilead has some pricing troubles on other drugs as well. For instance, its Truvada pill was found to be so overpriced that it prevented widespread use from stepping in. The pill, approved for use in 2012, saw massive jumps in price, as evidenced by government spending, which went from $114 million in 2014 to almost $2.1 billion in 2018.

Some are less than convinced those gains will hit, however; our own research pointed out that Piper Sandler has lowered its fourth quarter of 2021 earnings per share estimates for Gilead Sciences down to $1.75 per share, instead of the expected $1.80. There will be some gains, Piper Sandler noted as it offered up projections for the next three fiscal years. The 2022 estimates were $8.15 per share, the 2023 earnings were $8.70, and the 2024 earnings an impressive $10.60 per share. Meanwhile, the Royal Bank of Canada cut its price target from $84 down to $82. Consensus ratings have shifted a bit in the company's favor, with two “sell” ratings, 15 “hold” ratings, and 10 “buy” ratings now in place. A “hold” switched to a “buy” over the last month. However, BidaskClub changed from a “sell” to a “strong sell,” which isn't exactly in its favor.

Diversification is Key

We've suggested before that Gilead Sciences' best value is in the future, and now, we're discovering that's a consensus view. “Hold” and “buy” recommendations are the biggest part of the package, and with Piper Sandler projecting a steady climb upward in terms of EPS for the next three years, getting in on Gilead might be a plan you'll be thanking yourself for in a few years.

Granted, the company has some problems, particularly in terms of determining how much things should cost. But with pharmaceutical advancements on several fronts, there's plenty of room for gain here. The company has proven, if absolutely nothing else, that the key to long-term survival for any business is a diversified portfolio. Whether it's investments, product lines, or services, being a one-job shop is the fastest way to fail if something goes wrong