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Strategies & Market Trends : Value Investing

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To: Paul Senior who wrote (57787)	8/17/2016 6:46:36 PM
From: Micah Lance	Read Replies (2) of 78753

Ok so how about Gilead (GILD)? High ROE & ROIC for the past 10 years, wide moat (based on morningstar), pretty large pipeline of their own drugs as they have spent $4billion in the TTM in R&D, did a quick calc and EV/FCF came out to about 7.1, gurufocus DCF gives it a fair value of $121.46 ($124.95 if you include tangible book value) so according to that it's about 35% undervalued. The company has $8.75 billion in cash. They said in their latest earnings call that they are ending their share buyback program and will start looking at potential acquisitions to help grow their revenue. They have 5+ drugs in phase 3 trials that will assist in expanding revenues. It seems like they have a strong position based on their current drugs in market, have significant capacity to maintain their position at the very least, and have the cash position and cash generating abilities to bring more drugs to market to grow from their current position.

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