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Biotech Stock To Buy Now: Gilead Sciences (GILD)

Gilead Sciences (GILD) has been a leader in the resurgent Biotech group. Gilead recovered from the steep drop in the Biotech group in March and April and has been outperforming the group and the overall market since mid-May. With GILD leading the Biotech stocks to new highs, all eyes will be on their earnings report due out this week.

Gilead gave us a clue to the upcoming earnings report last week when they released sales data on their new hepatitis C combination pill Harvoni. Leveraging their success with Sovaldi, a revolutionary hepatitis C drug and one of the two components of Harvoni, which has generated over $6 billion in revenue since its release in December 2013, Harvoni scripts are “off to the races” according to UBS analyst Matthew Roden.

There is conjecture that GILD’s earnings may suffer because of higher marketing costs associated with the Harvoni roll-out and research costs associated with other new drugs in Gilead’s pipeline. However, it is this exciting new drug pipeline with the ability to generate such out-sized revenue in a short period of time that has caused investors to push GILD to new all time highs in the past week.

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Taking the longer view, any pullbacks in GILD after the earnings are reported, after the close on Tuesday, would be buying opportunities for long term investors.

If the earnings surprise to the upside, this stock will be hard to buy, but chasing it with the stock, group and market overbought doesn’t seem prudent.

With the Health Care sector the one shining light in a very volatile October and Biotech leading the Health Care sector, Gilead is a stock with all the appeal of an exciting long term growth story with no short-term resistance.

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If the stock market resumes its uptrend after the November elections, GILD should be a market leader and reward investors the courage to look beyond short-term earnings volatility.

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