Shares of drug giant and biotechnology specialist Gilead Sciences (GILD) will trade ex-dividend Monday, March 14. To qualify for a dividend check, investors must own Gilead stock before its ex-dividend date, when it finalizes its roster of shareholders to whom it will send dividend checks.
Investors would do well to buy these shares now -- and hang onto them.
The recent punishment of biotech stocks has sent the SPDR S&P Biotech ETF (XBI) plummeting nearly 29% year to date. Gilead stock is down more than 13% in 2016, even though the Foster City, Calif.-based company has beaten Wall Street's revenue and earnings-per-share estimates in five straight quarters.
But analysts don't expect Gilead stock to remain down too long.
Gilead's dividend yields 2% annually, about on par with the yield paid out by the average stock in the S&P 500 (SPY) index. That's not a breathtaking yield. But Gilead is also growing revenue and earnings at impressive rates. Last month the company reported a 16.4% rise in fourth-quarter revenue. Better still, its full-year earnings surged 31% to $32.2 billion and earnings per share rose 56% for the full year to $12.61.
Still, because of a perceived weakness in its drug pipeline, Gilead stock is currently priced at just 7 times fiscal 2016 estimates of $12.21 per share. This means, its forward price-to-earnings ratio is 10 points lower than the forward P/E of 17 for the S&P 500.
The company last week received approval by the Food and Drug Administration for its HIV-fighting drug Odefsey, which is Gilead's second TAF-based regimen to receive FDA approval. It is the smallest single-tablet regimen for the treatment of HIV.