Investors who are looking to nurse their portfolios back to health after the market's huge decline should considerGilead Sciences (GILD) - Get Report . Although shares of the biotechnology specialist stumbled out of the gate this year, falling some 9%, analysts expect the stock to reach as high as $129 in the next 12 months, delivering some 40% gains. The stock currently trades at around $93 per share.
Headquartered in Foster City, Calif., Gilead is scheduled to report fourth quarter 2015 earnings results after the closing bell Tuesday. Although concerns remain about how well Gilead can sustain its revenue -- particularly in its hepatitis C business -- earnings per share estimates for the just-ended quarter have been rising, with analysts now projecting growth of around 23%.
Just in the past 90 days, consensus EPS projections for the quarter have increased 5.6% from $2.83 a share to $2.99. During that span, estimates for fiscal 2015 and fiscal 2016 have climbed 4.6% and 4%, respectively. And it's for this reason, among others, that Gilead belongs on your radar now.
For the quarter that ended in December, the analysts' average estimate anticipates Gilead earned $2.99 a share on revenue of $8.11 billion, marking strong increases of 23% and 11%, respectively. For the full year, earnings are projected to have climbed 50% to $12.21 a share, with full-year revenue of $32.24 billion, up 30% from a year ago.
And here's the thing: Even as these estimates have increased, GILD stock has declined by 15% in the past three months, and 18% over the last six. This doesn't make sense, especially considering that the company has beaten Wall Street's revenue and EPS estimates in four straight quarters.
With GILD now priced at just seven times fiscal 2016 estimates -- 10 points below the forward P/E of the S&P 500 (SPX) index -- it's reasonable to expect that the market will eventually realize its mistake and correct Gilead shares upward. Even if that doesn't happen immediately, the stock has a consensus buy rating, and that average analyst 12-month price target of $129 -- combined with its 43-cent quarterly dividend yielding about 1.90% annually -- make it worth the wait.
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.