Posted October 26, 2014 14:31pm
I have remained bullish on GILD for a while now. The stock has returned phenomenal gains YTD and is one of the leading biotech names. There are many technical reasons to like the stock, but more importantly, there are fundamental ones as well.
Growth
• GILD has been growing at an amazing rate of 91% this past year. Albeit, growth is expected to slow down to 20%, which is still above the industry average of 17%. In our market climate, people pay a premium for high growth names. We have seen this especially in the social media sector. Earnings • GILD is trading at only 12x next year’s earnings, which is significantly below the S&P 500s P/E of 16. So, in turn, here we have a stock that is growing at a faster pace than most big cap biotech names, but is trading at a discount to its peers.
Technicals
o The technicals highlight many reasons to be bullish on GILD. See chart below GILD broke-out of a 2 month consolidation. o The V-shaped bottom is a very bullish sign o The positive MACD, after 2 months of being negative shows that the stock should continue to breakout.
Upcoming and Year-End
GILD is coming out with earnings on Tuesday. I expect another beat, and will most likely play the stock for upside, depending on how much the premium will be. I will most likely sell a put spread. I think that if we get solid earnings this week, the stock is heading for 120-125 by year end.
