Gilead Sciences, Inc. (NASDAQ:GILD) shares have declined 40% since July 2015. Some investors have sold the stock and moved on. I wondered if I should do the same. I’ve decided to hold on for now. Here’s why.
Is Gilead Sciences priced at a value?
The company experienced tremendous earnings growth in 2014 and 2015, but its falling earnings since 2016 are expected to continue their slide for at least two more years.
Think of it this way, though, if the 2018 earnings-per-share forecast of $7.75 materializes, that will still be a CAGR of 30.6% over five years from 2013 to 2018, which will still be an amazing rate of growth that’s not easily found in such a big company.
Using that same $7.75 EPS, Gilead would be trading at a 2018 multiple of about 8.9, which would still be an attractive buy for a company that maintains its profitability. And if Gilead starts showing any hint of growth, the stock will surely start heading higher.