Between 2017 and 2021, net profits from the sale of Sovaldi and Harvoni ought to total somewhere around $70 billion. Based on current trends, about $30-$40 billion of that will go towards dividend payments and share repurchases that benefit the shareholders of Gilead Sciences. This means that Gilead stands to have at least $30 billion in the next five years that can be used to make acquisitions and develop other drugs.
For this reason, I consider Gilead’s current market cap of $99 billion, compared to almost $15 billion in annual profits, to be a signal of deep value at a P/E ratio of 6.7x earnings. This is crazy.
I cannot think of another time in which a stock was trading at this cheap of a valuation while bringing in more than a billion dollars in profits per month. I do understand why it has become generally disfavored–Merck has brought to … Read the rest of this article!