Can Gilead Sciences (NASDAQ: GILD) make money from Coronavirus? — Market Mad House
Many investors think Gilead Sciences (NASDAQ: GILD) can make money from coronavirus.
To explain, Gilead’s focus is the development, manufacture, and commercialization of antiviral drugs. Obviously, COVID-19 is a virus, hence the term coronavirus.
Moreover, authorities in many countries authorize the use of Gilead’s remdesivir as a treatment for severe cases of the coronavirus. In fact, clinical trials show remdesivir can shorten recovery times for severe COV-19 cases, Yahoo! News claims.
Additionally, the European Commission has given preconditional (emergency) approval for remdesivir’s use as a coronavirus treatment in the European Union (EU). Notably, the European Commission is in talks with Gilead to supply remdesivir to 27 EU countries.
Mr. Market Likes Gilead Sciences
The Gilead Sciences Inc. (NASDAQ: GILD) share price rose from $65.23 on 2 January 2020 to $75.61 on 8 July 2020. Hence, Mr. Market thinks Gilead can profit from coronavirus, but what is Gilead Sciences?
Gilead develops and markets antivirals drugs that target specific viruses or symptoms of viruses. Unlike antibiotics, antivirals do not kill pathogens. Instead, antivirals suppress viruses by inhibiting their development.
Gilead offers many antivirals, including 12 treatments for HIV/AIDS. In addition, Gilead offers treatments for liver disease, inflammation and respiratory disease, the flu, and more. Popular Gilead products include Tamiflu, Sovaldi, Viread, and Descovy.
Will Gilead Sciences Make money with remdesivir?
Investors’ hope is that remdesivir could be as successful as Tamiflu or Descovy. There could be a huge market for remdesivir. For instance, coronavirus hospitalized 33,277 Americans in 2020, the Centers for Disease Control and Prevention (CDC) estimates.
Moreover, Worldometers estimates there had been 12.115 million coronavirus cases globally by 8 July 2020. In addition, Worldometers estimates 550,484 people had died of COVID-19 in the first six months of 2020.
Additionally, coronavirus is getting worse. Worldometers estimates there were 4.561 million coronavirus cases and 5.504 COVID-19 deaths on 8 July 2020.
Thus, the demand for coronavirus treatments could be huge. Additionally, some observers including Scott Prof G. Galloway think coronavirus could be similar to AIDS.
How Gilead could cash in on Coronavirus
To explain, there is no vaccine for AIDS, although scientists have been working on one for 40 years. However, UNAIDS estimates there are 37.9 million people with HIV infections worldwide. Hence, Gilead has 37.9 million customers for its AIDS/HIV drugs.
There could be a similar demand for coronavirus treatments because thousands of people are reporting COVID-19 symptoms that linger for weeks. Those symptoms include lung damage, fatigue, breathing problems, diarrhea, and brain damage. In particular, many people report losing senses, such as smell.
Inflammation causes many of those problems. That could help Gilead which manufactures inflammation treatments such as Cayston and Tamiflu.
I think Gilead could make money off the pandemic for years or decades because hundreds of thousands of people all over the world could suffer from stubborn COVID-19 infections. Those people could need treatments for problems such as inflammation and Gilead could provide those treatments.
Is Gilead Sciences Making Money?
Gilead Sciences (NASDAQ: GILD) is making money from its existing business. For instance, Gilead made a $4.579 billion quarterly gross profit on quarterly revenues of $5.548 billion on 31 March 2020.
Moreover, Gilead reported $2.402 billion in quarterly operating income on 31 March 2020. Plus, Gilead generated $1.551 billion in quarterly common net on the same day.
Notably, Gilead is growing during the pandemic. For instance, Stockrow estimates Gilead’s revenue growth rate grew from 1.45% in the last quarter of 2019 to 5.06% three months later.
Plus, Gilead’s quarterly operating income rose from $1.093 billion to $2.402 billion in the same period. However, Gilead’s quarterly net income fell from $2.696 billion at the end of 2019 to $1.551 billion three months later.
Conversely, Gilead’s quarterly gross profit grew from $4.196 billion to $4.579 billion between December 2019 and March 2020. Yet, the quarterly revenues fell from $5.879 billion to $5.548 billion.
Gilead Sciences is a Cash-Rich Business
Importantly, Gilead Sciences (NASDAQ: GILD) is a cash-rich business. Gilead reported a quarterly ending cash flow of $10.051 billion on 31 March 2020. That number rose from $2.157 billion on 31 December 2019 but fell from $16.927 billion on 31 March 2019.
Conversely, Gilead’s quarterly operating cash flow fell from $2.58 billion on 31 December 2019 to $1.436 billion on 31 March 2020. That operating cash was $1.577 billion on 31 March 2019.
Finally, Gilead had $20.785 billion in cash and short-term investments on 31 March 2020. The cash and short-term investments fell from $24.352 billion on 31 December 2019 and $27.904 billion on 31 March 2019.
Unfortunately, Gilead reported $22.098 billion in long term debt on 31 March 2020. Fortunately, Gilead has the cash to pay that debt off or refinance at a lower-interest rate.
Thus, I consider Gilead a cash-rich company with high growth potential. Moreover, governments will finance the purchase of Gilead’s products with tax money. Hence, Gilead could be a recession-proof business.
Notably, most countries in the European Union offer single-payer health insurance. Under a single-payer system the government finances basic health care, such as coronavirus treatments, for all citizens. Thus, I think Gilead will make money in economic downturns.
Is Gilead Sciences a Good Dividend Stock?
I consider Gilead (NASDAQ: GILD) a good divided stock because it paid a 68₵ quarterly dividend on 11 June 2020.
That dividend grew by 5₵ in 2020 rising from 63₵ on 12 December 2019 to 68₵ on 12 March 2020. Overall, Dividend.com estimates Gilead offered a $2.52 annualized dividend and a 3.28% dividend yield on 8 July 2020.
In the final analysis, I consider Gilead a cash-rich growth stock that pays a good dividend. I think people seeking safe income stocks with growth potential for the coronavirus age need to investigate Gilead Sciences (NASDAQ: GILD).
Originally published at https://marketmadhouse.com on July 8, 2020.