Gilead Sciences' (GILD) Hep C Treatment Receives 'Low Value' Rating

NEW YORK (TheStreet) -- Shares of Gilead Sciences  (GILD) stock are up 10 cents to $79.94 despite a "low value" rating given to the company's hepatitis C drug treatment Sovaldi by a California medical group.

Citing its high cost, the California Technology Assessment Forum concluded that not all hep C patients need the most expensive drugs on the market. The insurance group estimated that treatment using the Sovaldi regimen would cost the state of California $84,000 per patient or $6 billion for the entire state. Meanwhile, a cheaper alternative produced by Johnson & Johnson  (JNJ) costs $66,000.

Medicaid authorities in Pennsylvania and Colorado already limit Sovaldi treatments to only the sickest patients citing the drugs high cost.

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TheStreet Ratings team rates GILEAD SCIENCES INC as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

"We rate GILEAD SCIENCES INC (GILD) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance, reasonable valuation levels, expanding profit margins and increase in net income. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • GILD's revenue growth has slightly outpaced the industry average of 15.1%. Since the same quarter one year prior, revenues rose by 20.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
  • Compared to its closing price of one year ago, GILD's share price has jumped by 76.03%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, GILD should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • The gross profit margin for GILEAD SCIENCES INC is currently very high, coming in at 75.91%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 25.36% is above that of the industry average.
  • GILEAD SCIENCES INC reported flat earnings per share in the most recent quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, GILEAD SCIENCES INC increased its bottom line by earning $1.83 versus $1.64 in the prior year. This year, the market expects an improvement in earnings ($3.78 versus $1.83).
  • You can view the full analysis from the report here: GILD Ratings Report
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