Gilead Sciences’ valuation
Gilead Sciences (GILD) is one of the leading biopharmaceutical companies. Gilead Sciences discovers, develops, and commercializes various innovative medicines.
The above chart compares Gilead Sciences’ revenues and EPS (earnings per share) since 1Q16. Gilead Sciences surpassed analysts’ estimates and reported an EPS of $1.78 on revenues of $5.9 billion during 4Q17—an 18.7% decline in revenues compared to $7.3 billion in 4Q16. For fiscal 2017, Gilead Sciences reported an EPS of $8.84 on revenues of $26.1 billion—a 14.1% decline in revenues compared to $30.4 billion in 2016.
Forward PE multiple
PE (price-to-earnings) multiple represent what one share can buy for an equity investor. As of March 1, 2018, Gilead Sciences was trading at a forward PE multiple of 12.1x—compared to the industry average of 13.0x. AbbVie (ABBV) is trading at a higher forward PE multiple of 14.8x. Biogen (BIIB) and Celgene (CELG) are trading at lower forward PE multiples of 11.4x, and 9.8x, respectively—compared to Gilead Sciences.
On a capital structure neutral and excess cash adjusted basis, Gilead Sciences trades at ~9.2x, which is lower than the industry average of 10.7x, as of March 1, 2018. AbbVie is trading at a higher forward EV-to-EBITDA multiple of 13.8x. Biogen and Celgene are trading at lower forward EV-to-EBITDA multiples of 8.4x and 6.5x, respectively—compared to Gilead Sciences.
Notably, the iShares NASDAQ Biotechnology ETF (IBB) holds 8.3% of its total investments in Gilead Sciences, 7.2% in Celgene, and 6.8% in Biogen.