Gilead looks attractive again. Its innovative edge and new crop of medications are performing well across multiple specialties. By Teresa Rivas

No good deed goes unpunished. Gilead Sciences' stock is proof. It's time for investors to give the biotech another look.

A little more than a decade ago, Gilead introduced Sovaldi and Harvoni, medications for the liver disease hepatitis C that were truly revolutionary. The stock shot up to a record intraday high of more than $122 in 2015. As it turned out, the drugs worked so well that many patients didn't need ongoing treatment, and headlines mostly fixated on the roughly $95,000 price tag. Gilead shares started a long decline, and only now, some 10 years later, have they approached their previous high.

With its lost decade behind it, Gilead looks attractive once again. Its innovative edge and new crop of medications are strong performers across a number of specialties. The stock's 2026 multiple of 13 times earnings is undemanding, and it has a generous dividend, to boot.

"The prior high, around the hep C launch, was a product of high multiples built on dramatic short-term treatments that didn't deliver a durable revenue stream, but it's more interesting this time around," says Jeff Holford, an analyst at T. Rowe Price, which was one of Gilead's top 10 shareholders as of the second quarter. "Today the stock momentum is built on a much more sustainable business and on a much lower multiple, which is far more encouraging for a longer-term investor."

In 2015, more than 90% of Gilead's business came from antivirals such as Sovaldi and Harvoni. Today the picture looks far different, thanks to a series of savvy acquisitions. Liver disease accounted for just 10% of sales in 2024, while just over two-thirds came from its dominant HIV treatments. Its oncology business has more than doubled since 2020.

That strength was on full display in the company's recent second-quarter report, when Gilead beat top- and bottom-line expectations. Management struck an optimistic tone about its core HIV business, projecting higher revenue for the segment.

Although its latest HIV drug, Yeztugo, was launched too recently to affect the quarter, Truist Securities analyst Asthika Goonewardene says he was "highly encouraged by the leading indicators of demand." He upgraded the shares to Buy from Hold on the back of the report, and raised his price target to $127 from $108; shares recently traded at $111. "We continue to think Gilead has the best-in-class, unparalleled HIV business in the sector," Goonewardene writes.

Oncology is also doing well. Gilead's Trodelvy antibody-drug conjugate, or ADC, returned to growth in the quarter to the tune of 14% year over year. Its CAR T-cell therapy franchise, a category of treatment that uses personalized inputs to harness a patient's immune system to recognize cancer, wasn't as strong a performer. But Goonewardene is optimistic that Gilead's Anito-cel, developed in partnership with Arcellx, will be "the best-in-class CAR-T for multiple myeloma" when it comes to market, likely next year.

That has been helping Gilead's profitability. Earnings per share declined in 2024, but consensus expectations are for EPS to soar 75% year over year to $8.11 in 2025, and climb another 6.3%, to $8.62, in 2026. Analysts -- whose average price target of $127 implies 14% upside -- are also forecasting gross margins to expand well above their five-year average this year and next, to more than 83%.

Investors may understandably be nervous about investing in healthcare stocks in general and biotech in particular at a time when established science, like the safety and efficacy of vaccines, is being questioned by U.S. Health and Human Services Secretary Robert F. Kennedy Jr. and others in the current administration. The Health Care Select Sector SPDR exchange-traded fund has tumbled 6.4% over the past year, while the SPDR S&P Biotech ETF and the iShares Biotechnology ETF, both of which count Gilead as a top 15 holding, are barely in the green for the past 12 months. All three funds trail the broader market this year, as well.

The uncertain policy outlook around healthcare stocks is a legitimate concern in terms of approval and coverage rates for new drugs. Yet there is also hope that with strong clinical data in hand, individual states might throw their weight behind new treatments. Leerink analyst Daina Graybosch says, "Some state Medicaid moves to cover Yeztugo positively signal that some payers appreciate the treatment's value," and could put the drug in the hands of more patients, even at additional cost sharing.

It's also worth noting that after years of mergers and acquisitions to diversify its pipeline, Gilead has no big deals or integrations left to distract management, tie up cash, or muddy performance metrics.

Perhaps most important, the story of Gilead today is that of a "company executing off the area they're the best in the world at," says Holford -- its HIV and cancer drugs.

The stock's performance, too, should be the picture of health.

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October 03, 2025 21:30 ET (01:30 GMT)

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