Time to Buy GILEAD Sciences Stock?
Gilead Sciences $GILD is one of the best performing stocks in this bear market as they make the drug Remdesivir, which is being used to treat people affected by the coronavirus. This is only an experimental drug and we cannot know for sure how much they are selling and if really this is our solution. We hope it is but as investors, we need to be rational. This same drug was used in 2014 during the Ebola outbreak. Gilead Sciences also made the drug, which was used in 2009 during the H1N1 pandemic, Tamiflu. Why Gilead Sciences? Gilead is only the second largest biotech company in the world after Amgen $AMGN . It is because of specialisation. Amgen is more diversified and they make drugs mostly to cure people suffering from cancer and neurological disorders. This is a good business since people are living longer and longer and this is a certainty that more people will have cancers or dementia. Gilead, on the other hand, focus on immunology. When there's an outbreak, then they make a lot of money but once the outbreak is gone, they have pretty average returns. The problem in investing in Gilead Sciences is that they may not even make that much money from Remdesivir as they will most probably outsources the mass production to a bigger pharmaceutical company and only collect the royalty from it. This is what they did with Tamiflu when Roche made more money that them. Gilead Sciences can still make money if they develop a vaccine but there are several companies competing with them, namely, Moderna and Vir Biotechnology. These two companies are small and they don't make much money. If they do develop the vaccine, the stock price will skyrocket. But at current valuations, they are really expensive. Moderna has a market cap of $10 billions for $60 millions in sales and $500 million loss last year. If let's say they make the vaccine, the stock price can gain maybe 500%. We cannot expect the stock price for such a small company to go beyond $50 billion. But if they fail, then it crashes. It is more gambling than investing. There's so many companies at a discount right now, it is better to invest in them. The risk is lower and the reward higher. Watch the full video on YouTube and Subscribe: https://www.youtube.com/watch?v=7E4_AMJY_Ic&list=UUPO3uUyoXSaFWG-Ldq1mqEQ You can find the whole analysis here: https://ishfaaqpeerally.teachable.com/courses/662813/lectures/14767964 Join my private investing group on Facebook for more: https://www.facebook.com/groups/IshfaaqInvesting/