Gilead Sciences (GILD): A Hidden Gem in the Healthcare Beat-Down?

Healthcare stocks are down, but sentiment often clouds opportunity … and Gilead Sciences (NASDAQ: GILD) is a case in point. 

Despite noise around political shifts like RFK Jr.'s controversial appointment and concerns over healthcare policy, Gilead’s fundamentals tell a much brighter story: a wide moat, steady cash flow from its HIV drug portfolio, and promising growth from its oncology pipeline.

It’s no wonder Gilead receives a Zen Rating of “A” or Strong Buy. Let’s take a closer look at these tailwinds. 

Zooming Out: Opportunity In Drug Manufacturers

Before we go deeper, a quick glance at the sector more broadly. 

The Vaneck Pharma ETF (NASDAQ: PPH) which tracks a market cap-weighted basket of these stocks, is down roughly 14% from its highs in 2024:

A message from our sponsors...

Expert Trader "All In" on the Nuclear Power

The power grid's looming crisis could turn into the biggest money-making opportunity you'll ever see.

Expert traders top pick for exploiting this emerging opportunity centers on an extraordinary $8-per-share "Savior Stock"

Click here to see how to get the details.

Thanks to our sponsors for keeping this content free.

But here’s why that drawdown could equal a fantastic opportunity.

A closer look shows the ETF is nearing multiple levels of multi-year technical support (orange, yellow) which suggests these pharma stocks more broadly could find support and turn around soon, perhaps making for a good “buy the dip” opportunity:

On that note, overall, drug manufacturers are some of the best-scoring stocks in our models right now, and GILD is ranked #1:

Click here to see all top drug manufacturer stocks.

Why Gilead Stands Out in Uncertain Times

Many investors are concerned about Trump’s appointment of Robert F. Kennedy Jr. to head of the Department of Health. Kennedy is largely seen as “anti-pharma.”

The recent United Healthcare (NYSE: UNH) CEO shooting has also brought increased negative attention to the healthcare sector. 

But while political headlines might spook investors, healthcare is notoriously resistant to sweeping changes. This is a very bureaucratic, slow-moving sector with lots of regulations in place. It’s unlikely major changes will happen in just a few years. 

Plus, Gilead’s focus on life-saving therapies for infectious diseases and its dominant position in the HIV market make GILD uniquely positioned to thrive even in turbulent regulatory environments.

Its flagship HIV treatment, Biktarvy, continues to dominate due to its safety and efficacy, and emerging treatments like Trodelvy offer a pathway to blockbuster growth in oncology.

The Power of Wide-Moat Biopharma

Gilead has a wide moat because its patent-protected drugs and unparalleled expertise in infectious diseases create barriers to competition. Unlike speculative biotechs, Gilead already produces consistent cash flows. 

This is because it has a dominant share (estimated at 60%) of the HIV drug market. The company makes life-saving medicine that’s unlikely to go anywhere. 

GILD's recent focus on acquisitions, including Kite Pharma's CAR-T therapies, signals a commitment to diversifying its revenue streams and positioning itself in high-growth markets like oncology.

Is GILD a Value Play?

Trading at a forward Price-to-Earnings (P/E) ratio of 12, GILD may also offers an attractive valuation compared to peers.

That’s part of why GILD scores an A in value according to our Zen Component Grades. Our Value rating evaluates various valuation metrics to identify companies that are undervalued relative to their earnings potential, uncovering hidden opportunities in the market.

It also has B ratings in Safety and Financials and earns an above-average rating from our proprietary AI factors, which take a deep dive into subtle patterns in stocks that could lead to superior performance.

Click here to see how GILD scores across all our Components. 

The company’s single-tablet HIV regimens and efforts to expand indications for oncology treatments like Trodelvy show that innovation remains front and center. 

Overall, Gilead’s combination of a wide moat, robust cash flow, and exciting pipeline make it a standout in a beaten-down sector. If you’re looking for healthcare exposure with staying power and growth potential, GILD is an A-rated stock that deserves a spot on your watchlist.

What to Do Next?

• Watch “Zen Ratings Revolution” to Unlock +32.52% Annual Gains >
• Upgrade Your Investing - Start Your Premium Trial Now! >
• Discover Zen Investor portfolio to Find More 100%+ Stock Winners>

Want to get in touch? Email us at news@wallstreetzen.com.