Gilead Sciences

Methodology

Gilead Sciences' biopharmaceutical business generates stable earnings from HIV franchises but faces declining hepatitis C revenue as patient populations cure out. The company's oncology pipeline and cell therapy assets provide growth potential. This calculation requires careful normalization for declining HCV sales and assessment of HIV market durability plus pipeline probability—current earnings may overstate or understate sustainable profitability depending on pipeline success.

Methodology

Gilead often shows attractive PEG ratios reflecting concerns about HIV franchise maturity, patent expirations, and pipeline execution risks. The company's strong cash generation and low valuation signal either value or structural decline concerns. A low PEG may represent opportunity if oncology pipeline delivers, or appropriately discount significant business model challenges as legacy blockbusters mature.

Methodology

Gilead pays a substantial dividend yielding significantly, making PEGY more attractive than PEG for this mature biotech. The company's exceptional cash generation from HIV drugs supports generous dividends despite growth challenges. PEGY is highly relevant for income-focused biotech investors, though dividend sustainability long-term depends on successful pipeline development to replace maturing HIV franchise revenue.