Gilead Sciences, Inc.

(NASDAQ Global Select)
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Bullish +55

Gilead Has Outperformed the S&P 500. But is its Valuation Still Attractive?

Acquisition Drug approval AI-generated analysis

πŸ“ˆ Gilead Sciences stock surged over 24% year-to-date, significantly outperforming the S&P 500's 14% return.

πŸ’° The company trades at a normalized forward P/E of approximately 15.5x based on earnings expectations rather than reported EPS distorted by acquisition charges.

πŸ”¬ Q2 2026 total revenue increased 10% year-over-year to $7.8 billion, driven by strong HIV franchise performance.

πŸ’Š HIV product sales grew 12% to $5.7 billion in the second quarter, with Biktarvy sales rising 7% to $3.8 billion.

βœ… Gilead received FDA approval for Yeztugo, a long-acting HIV prevention option, and Hepcludex for chronic hepatitis delta virus infection.

🧬 The company secured FDA acceptance for an application regarding a potential once-weekly oral formulation for HIV pre-exposure prophylaxis.

πŸ“‰ Oncology segment faces challenges with cell therapy sales falling 14% in Q2, specifically Yescarta down 12% and Tecartus down 24% due to competition.

πŸ’Έ Acquisitions of Arcellx, Tubulis, and Ouro Medicines resulted in $11.2 billion of acquired in-process R&D expenses in the second quarter alone.

πŸ“‰ Reported diluted loss per share reached $(8.45) in Q2 2026 due to acquisition-related IPR&D charges impacting earnings.

βš–οΈ Analysts note that while the valuation is defensible, Gilead must generate sufficient returns from its new technologies to justify higher expectations post-rally.

Bullish Signals
  • Gilead Sciences stock has outperformed the S&P 500 with a year-to-date gain of over 24% compared to the index's 14% return.
  • The company's core HIV franchise remains a strong growth driver, with total revenue increasing 10% year-over-year to $7.8 billion in Q2 2026.
  • HIV product sales grew 12% to $5.7 billion in the second quarter, demonstrating the durability of the company's largest existing franchise.
  • Gilead received FDA approval for Yeztugo, a long-acting HIV prevention option, expanding its portfolio in the high-growth HIV market.
  • The company secured FDA accelerated approval for Hepcludex, becoming the first and only FDA-approved treatment for chronic hepatitis delta virus infection in the United States.
  • Oncology segment shows growth potential with Trodelvy sales increasing 26% year-over-year to $457 million in Q2 2026.
Risk Factors
  • Reported diluted loss per share reached $(8.45) in Q2 2026, driven by approximately $9.08 per share in acquisition-related IPR&D charges.
  • Cell therapy sales fell 14% in the second quarter, with Yescarta down 12% and Tecartus down 24%, primarily due to increased competition.
  • The stock's valuation cushion has narrowed as the share price rallied 28% over the past year, reducing the margin of safety compared to pre-rally levels.
  • Investors are now paying a premium that reflects both the durability of the HIV franchise and the potential payoff from billions invested in new technologies.
Full Analysis
Gilead Sciences (NASDAQ: GILD) has significantly outperformed the broader market, surging over 24% year-to-date compared to the S&P 500's 14% return. Despite this rally, the stock trades at a normalized forward P/E of approximately 15.5x, which analysts view as reasonable given the company's underlying business growth and durable HIV franchise. The core driver for Gilead's valuation is its robust performance in the HIV segment. In the second quarter of 2026, total revenue increased 10% year-over-year to $7.8 billion, with HIV product sales growing 12% to $5.7 billion led by Biktarvy. Additionally, the company secured FDA approvals for Yeztugo, a long-acting HIV prevention option, and Hepcludex, the first approved treatment for chronic hepatitis delta virus infection in the U.S. Beyond its core franchise, Gilead is investing heavily in new growth engines through acquisitions like Arcellx, Tubulis, and Ouro Medicines, which incurred $11.2 billion in in-process R&D charges in Q2 2026 alone. While these charges caused a reported loss of $8.45 per share, the company's strategy relies on these technologies to expand beyond HIV. However, oncology faces headwinds with cell therapy sales falling 14% due to competition, and the stock's valuation cushion has narrowed as investors price in both the durability of its existing business and the potential payoff from expensive pipeline investments.