Should I buy Gilead Sciences shares in May 2022?

Gilead Sciences, Inc. (NASDAQ: GILD) shares have weakened from $72.27 to $57.19 since the beginning of January 2022, and the current price stands around $59.39.

Gilead Sciences reported better than expected first-quarter results last week, and the company’s management updated financial guidance for the 2022 fiscal year.

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Signs of recovery in the HIV treatment market

Gilead Sciences is an American biopharmaceutical company that focuses on researching and developing antiviral drugs used to treat HIV, hepatitis B, hepatitis C, and influenza.

The company reported better than expected first-quarter results last week; total revenue has increased by 2.6% Y/Y to $6.59 billion, while the non-GAAP earnings per share were $2.12 (beats by $0.31).

Sale of its COVID-19 treatment Veklury continues to play a significant role in the company’s business, and total first-quarter Veklury sales reached $1.5 billion, which represents an increase of 5% compared with the first quarter of 2021.

Veklury has demonstrated successful activity against the Omicron variant, but it is also important to mention that sales of HIV drugs, the company’s largest product segment, increased by 2% to $3.7 billion compared with the first quarter of 2021. Daniel O’Day, CEO of Gilead Sciences, added:

HIV grew 2% year-over-year, primarily driven by Biktarvy, which grew 18%, and reported more than 4% market share growth compared to the first quarter of 2021. This is notable given the impact of our Truvada LOE.

Gilead generated $1.8 billion in operating cash flow during the first quarter and closed the quarter with $6.8 billion of cash.

Despite this, net income for the first quarter fell more than 90% to just $12 million compared to the prior-year period, driven by a one-time in-process research and development impairment charge of $2.7 billion.

As a result of the research and development impairment charge, the company’s management revised a full-year EPS to $3.00-$3.50 from $4.70-$5.20.

Total product sales should be between $23.8 billion and $24.3 billion, which also represents a decrease from the 2021 fiscal year but Johanna Mercier, Chief Commercial Officer of Gilead, said that she is encouraged by the signs of recovery seen in the HIV treatment market.

Fundamentally looking, Gilead remains well-positioned for future growth, and the company continues to pay an attractive dividend. The current dividend yield stands around 4.9%, Gilead trades at less than six times 2021 EBITDA, and this company could deliver substantial shareholder value for many years to come.

$55 represents the current support level

Gilead Sciences shares continue to trade near 2022 lows, but the current price could be a good entry level for long-term investors.

If the price jumps above $65, it will signal to trade Gilead shares, and the next target could be $70.

On the other side, if the price falls below the current support that stands at $55, it would be a “sell” signal, and we have the open way to $50.

Summary

Gilead Sciences reported strong first-quarter results last trading week, but it is important to say that the company’s management revised a full-year EPS to $3.00-$3.50 from $4.70-$5.20. Gilead continues to pay an attractive dividend, and the current price could be a good entry-level for long-term investors.

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