GILEAD SCIENCES, INC. (GILD): what the price assumes
boothcheck covers GILEAD SCIENCES, INC. (GILD) but does not put one priced-in number on it: here the defensible answer is the evidence rather than a point estimate. boothcheck publishes no house fair value, target price, or buy/sell rating. Narrative composed 2026-07-03.
Generated: 2026-08-30 · Exported: 2026-08-31 · Source: https://boothcheck.com/report/GILD
Headline
| Field | Value |
|---|---|
| Ticker | GILD |
| Company | GILEAD SCIENCES, INC. |
| Current price | $144.81/sh |
| Composition | HIV 70% / Liver Disease 11% / Veklury 3% / Oncology 11% / Other products 3% / Royalty, contract and other revenues 2% |
What The Price Assumes (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin (value-band context) | 19.8% |
| Operating margin (mid-cycle) | 49.8% |
| Margin compression (value-band) | -30.0pp |
| Trailing margin (depressed year) | -8.2% |
| Multiple paid | 13x mid-cycle operating income |
The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.
The price sits below what even a 5%/yr operating-profit decline would warrant; the inversion reports a bound, not a solved growth path.
Solve inputs: computed at a 7.5% cost of capital with 4% terminal growth over a 5-year stage.
How unusual the bet is: n/a
| Reference | Value |
|---|---|
| vs own history | -0.42σ |
Valuation X-Ray
Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 15.90x | 2 | expensive |
| Earnings | 1.77x | 3 | expensive |
| Relative | 1.47x | 3 | expensive |
| Growth | 0.84x | 3 | justifies |
Families that justify the price: Growth Families that call it expensive: Asset, Earnings
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.1%); the inversion above states its own rate.
Per-Model Detail (n=11)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $258.58 | 0.56x | yes | FCF base $13.3B, growth 6% (input: historical growth), terminal g 4.0%, WACC 8.1%, 6yr projection |
| DCF Exit Multiple | Growth | $172.08 | 0.84x | yes | Exit EV/EBITDA: 17.1x / 19.1x / 21.1x (bear / base = today's held flat / bull), 6yr |
| Relative Valuation | Relative | $98.25 | 1.47x | yes | P/S fallback (negative EPS): Sector P/S 4.0x × TTM revenue — excluded from consensus |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $9.61 | 15.07x | yes | Reference only (book value floor): BV/sh $9.61, ROE negative |
| Two-Stage Excess Return | Asset | $8.65 | 16.74x | yes | Reference only (book value with convergence): BV/sh $9.61, ROE converges to ke |
| Discounted Future Market Cap | Growth | $116.26 | 1.25x | yes | Rev $30.5B, growth 6% (input: historical growth; tapered), Terminal P/S: 4.9x / 5.9x / 6.9x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | $0.00 | — | no | Negative/zero EPS — earnings-based value floored at $0 |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $15.25 | 9.50x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $4.80B × (1−21%) / WACC 8.1% → EPV (no growth) |
| Residual Income | Asset | — | — | no | — |
| Graham Number | Asset | — | — | no | — |
| EV/EBITDA Relative | Relative | $117.45 | 1.23x | yes | EBITDA $10.89B × sector EV/EBITDA 16.0x |
| FCF Yield | Earnings | $89.73 | 1.61x | yes | FCF $12943.0M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $81.81 | 1.77x | yes | SBC-adj FCF $12.03B (FCF $12.94B − SBC $0.91B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | — | — | no | — |
| ROIC-Justified P/B | Asset | — | — | no | — |
| P/Sales Sector | Relative | $98.25 | 1.47x | yes | Revenue $30.46B × sector P/S 4.0x |
| PEG Fair Value | Relative | — | — | no | — |
| Earnings Yield | Earnings | — | — | no | — |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Economic-Unit Decomposition (Sum Of The Parts)
The disclosed units share an operating capital structure; consolidated cash-flow lenses remain coherent and the unit split is explanatory.
| Unit | Role | Valuation basis | Revenue | Reported profit | Value evidence | Status |
|---|---|---|---|---|---|---|
| Pharmaceutical | operating | enterprise | 28.8B reported-currency | — | withheld | unresolved no unit value |
| Corporate and Other | operating | enterprise | 5.1B reported-currency | — | withheld | unresolved no unit value |
No total common-equity value is stated. One or more material units lack a supported unit value. The displayed values are an indicative subtotal; consolidated debt and cash cannot be applied to a fraction of the company.
Solvency
| Field | Value |
|---|---|
| Net debt | $25.5b |
| Net debt / NOPAT (after-tax) | 2.12x |
| Net debt / operating income (pre-tax) | 1.68x |
| Interest coverage | 15.2x |
| Share count CAGR (buyback) | -0.3% |
| Burning cash | no |
Leverage and coverage are computed on normalized mid-cycle operating income (mid-cycle margin 49.8%); the trailing year was depressed.
Bullet Takeaways
The loudest worry about Gilead is patent risk: Biktarvy alone is $3.36 billion a quarter, and one drug carrying the company invites a cliff fear. The data tempers it. At $123.63 (as of June 27, 2026) the price implies roughly flat operating growth, a low bar, and the company is below the middle of its peer multiple range.
The valuation is supported by the relative-multiple and growth-DCF lenses, while asset and earnings-power frames call it expensive. Several methods land above the price, and the priced-in assumption is undemanding for a 34.9% operating-margin franchise.
The balance sheet carries real debt: net debt near $23.5 billion, taken up further by recent deals. A planned $11.5 billion in-process R&D charge will push Gilead to a net loss for 2026. The bet is that the HIV franchise plus new launches like Yeztugo outrun the leverage and the patent overhang.
Bull Case
The first thing critics raise about Gilead is concentration risk: the company leans heavily on its HIV franchise, and Biktarvy alone generated $3.36 billion in a single quarter. A business this dependent on one therapeutic area, the worry goes, is one patent expiration or one competitive launch away from a cliff. But the data undercuts the fear in two ways. First, the HIV franchise is still growing, up 10% year over year in Q1 2026, not fading. Second, and more importantly, the price already assumes the bad outcome: at $123.63 the market is paying about 16 times operating income, implying roughly flat to slightly negative operating growth over five years. You are not paying for the franchise to compound; you are paying for it to hold roughly steady, and it is currently doing better than that.
The portfolio is broader and more durable than the cliff narrative allows. HIV is the engine, but Gilead also runs an oncology business led by Trodelvy and a growing pipeline of newer launches. The most important of these is Yeztugo, the twice-yearly HIV prevention injection, which generated $166 million in Q1, a 72% sequential surge, with full-year guidance raised to roughly $1 billion. A long-acting prevention product is exactly the kind of franchise extender that converts a treatment-led HIV business into a treatment-and-prevention platform, lengthening the runway the patent fear is worried about. Q1 2026 total revenue rose 4.4% to $6.96 billion, and EPS of $2.03 beat the $1.91 estimate, a 6% surprise. This is a franchise executing, not eroding.
The profitability and capital deployment make the valuation attractive for what you get. Gilead earns a 34.9% trailing operating margin, the kind of cash generation that funds both dividends and an active acquisition program. Management raised full-year revenue guidance to $30.2 billion. The recent Arcellx, Tubulis, and Ouro transactions, while they trigger a large one-time accounting charge, are deals to refill the pipeline and extend the growth runway, the standard playbook for a cash-rich pharma facing eventual patent maturities. Against the large-cap drug-manufacturer peer set of Eli Lilly, Johnson & Johnson, Bristol-Myers, Amgen, and Biogen, Gilead sits in the lower half of the peer multiple range, which means you are buying a high-margin, cash-generative franchise at a discount to its peers while the price assumes it merely holds flat. The growth from HIV prevention and oncology is the upside the multiple is not paying for.
Bear Case
The structural weakness in Gilead is on the balance sheet, and recent dealmaking has made it more fragile, not less. The company carries net debt of roughly $23.5 billion, and it is layering on more through acquisitions. The most immediate consequence is concrete: management plans to record about $11.5 billion of acquired in-process R&D expense in the second quarter of 2026, tied to the Arcellx, Tubulis, and Ouro transactions, and has said this will produce a net loss for both the second quarter and the full year 2026. A high-margin franchise that posts a full-year net loss because of acquisition accounting is a company spending heavily to buy a future it cannot generate organically fast enough, and it is doing so against a debt load that limits how many more such bets it can place. The FY2025 10-K already flagged the headwinds the deals are meant to offset, citing expected declines "in our Veklury product sales due to lower rates of COVID-19-related hospitalizations and an expected decrease in our Cell Therapy product sales reflecting ongoing competitive headwinds" (FY2025 10-K, accession 0000882095-26-000006).
The second problem is the concentration the bull case waves away. Biktarvy at $3.36 billion a quarter is the overwhelming driver, and the HIV franchise as a whole carries the company. The filing details the contractual fragility of even that base: license and collaboration agreements such as the one for Symtuza can be terminated "on a product or country basis" depending on circumstances including "withdrawal of a product from the market, material breach by either party" (accession 0000882095-26-000006). When one therapeutic area and a handful of products generate most of the profit, every patent date, every competitive launch (including long-acting rivals to Gilead's own products), and every contractual dependency becomes a single point of failure. The price assumes flat growth, but flat assumes the HIV base does not erode, and the company's own disclosures describe businesses already in decline.
The third issue is that the growth refill is unproven and the multiple discount may be deserved. Yeztugo is promising, but $166 million a quarter and a $1 billion full-year target is small against a $30 billion revenue base; it would take many such launches to offset a HIV cliff. Trodelvy and the oncology pipeline face their own competitive and clinical risks, and the just-acquired assets are early-stage by definition, hence the $11.5 billion write-off. Gilead trades in the lower half of its peer multiple range not only because it is cheap but possibly because the market doubts the durability of its earnings. The asset-based and earnings-power lenses agree the price is expensive (earnings-power value lands near $39, well below the $124 quote). A holder is betting that a leveraged, concentration-heavy pharma can buy and launch its way past patent maturities while servicing $23.5 billion of net debt. That can work, but it is a bet on capital allocation and pipeline execution, not on a self-sustaining growth engine.
Valuation
The inversion gives an undemanding bar. At $123.63 the market is paying about 16 times company-wide operating income, which at a 7.7% cost of capital implies operating growth of roughly negative 0.6% a year for five years. In plain terms, the price assumes the business is essentially flat. The priced-in assumption reads as within range, the near-term pace is within what Gilead has recently delivered, and on a peer basis the stock sits in the lower half of the drug-manufacturer multiple range. The market is not asking Gilead to grow; it is asking it not to shrink.
The model X-ray splits in the typical pattern for a mature, cash-rich pharma. The relative-multiple and growth-DCF families justify the price (DCF perpetual growth lands near $159, relative valuation near $150, two-stage DDM near $118, EV/EBITDA relative near $118). The asset-based and earnings-power families call it expensive (earnings-power value near $39, ROIC-justified book near $10, residual income near $125). The blended cross-method anchor sits near $150, above the price. The dispersion says the methods that lean on peers and forward cash flows see value, while the strict earnings-power lens is more cautious.
The balance sheet is the real constraint and the reason caution is warranted. Net debt is about $23.5 billion against roughly $10.4 billion of trailing operating income, with interest covered around 10 times, serviceable but substantial, and recent acquisitions add to it. The planned $11.5 billion in-process R&D charge will push Gilead to a net loss for 2026, a one-time accounting event but a real use of capital. The Q1 2026 results, revenue up 4.4% to $6.96 billion, an EPS beat, HIV up 10%, and Yeztugo surging, are real and material to the forward view. The reasonable conclusion is that Gilead is a high-margin, cash-generative franchise priced for flat results and trading below its peers, where the upside is the HIV-prevention and oncology growth the multiple ignores and the risk is a leveraged balance sheet funding an unproven pipeline refill against patent maturities. It is a value bet on a franchise the market has written off as ex-growth.
Catalysts
The Q1 2026 report on May 7 was the most recent catalyst and a positive one on the operating line. Total revenue rose 4.4% to $6.96 billion, and EPS of $2.03 beat the $1.91 estimate by about 6%. The HIV franchise grew 10% year over year, with Biktarvy contributing $3.36 billion. Yeztugo, the twice-yearly HIV prevention injection, generated $166 million, a 72% sequential surge, and full-year guidance for the product was raised to roughly $1 billion. Management raised full-year revenue guidance to $30.2 billion. (Sources: Gilead investor release; StockTitan 10-Q summary; IndexBox Q1 2026 results.)
The key forward item is the second-quarter accounting and dealmaking impact. Management plans to record about $11.5 billion of acquired in-process R&D expense in Q2 2026 tied to the Arcellx, Tubulis, and Ouro transactions, which will result in a net loss for both Q2 and the full year. The signals to watch are HIV franchise durability (especially Biktarvy and the Yeztugo prevention ramp), oncology progress led by Trodelvy, the pace of debt reduction against the roughly $23.5 billion net debt load, and pipeline progress from the newly acquired assets. Because the price assumes roughly flat results, the upside catalyst is evidence that HIV prevention and oncology are adding durable growth, while the risk is any sign the HIV base is eroding faster than the new launches can replace it. (Sources: Gilead news release; MarketBeat; Seeking Alpha Q1 2026 presentation.)
Peer Cohorts (Per Segment, With Filing Citations)
Pharmaceutical (reported)
- JNJ (Johnson & Johnson)
- FY2025 10-K: …market, resulting in the potential for substantial market share and revenue losses for the applicable products, and which may result in a non-cash impairment charge in any associated intangible asset. In addition, from time to time, the Company's subsidiaries may settle these types of actions and such settlements can…
- FY2025 10-K: 2025, representing an increase of 10.1% as compared to the prior year. Growth of SPRAVATO (esketamine) was driven by continued increased physician and patient demand. Growth was partially offset by the sales decline of INVEGA SUSTENNA / XEPLION / INVEGA TRINZA / TREVICTA primarily due to the impact of Medicare Part D…
- ABBV (AbbVie Inc.)
- FY2025 10-K: …directly or indirectly, through reimbursement, payment, pricing, coverage limitations, or compulsory licensing. Political and budgetary pressures in the United States and in other countries may also heighten the scope and severity of pricing pressures on AbbVie's products for the foreseeable future. United States.…
- FY2025 10-K: …the introduction of a generic or other follow-on product after the expiration of applicable patent and other regulatory exclusivity periods. Biologics may be entitled to exclusivity under the Biologics Price Competition and Innovation Act, which was passed on March 23, 2010 as Title VII to the Patient Protection and…
- LLY (ELI LILLY & Co)
- FY2025 10-K: …and vendors. These agreements may be breached, and we cannot be certain that we have adequate remedies. If our trade secrets or confidential information become known or are independently discovered by competitors, or if we enter into disputes over ownership of inventions, our business and results of operations could…
- FY2025 10-K: …our long-term competitive success depends on discovering and developing or acquiring and further developing innovative, cost-effective products that provide improved outcomes for patients and deliver value to payers, and continuously improving the productivity of our operations in a highly competitive and global…
- BMY (Bristol-Myers Squibb Company)
- FY2025 10-K: …end of regulatory exclusivity or the COM patent expiration for the respective products and PTR if granted. In situations where there is only regulatory exclusivity without patent protection, a competitor could seek regulatory approval by submitting its own clinical study data to obtain marketing approval prior to the…
- FY2025 10-K: …consolidation and integration of pharmacy chains, wholesalers and pharmacy benefit managers will increase competitive and pricing pressures on pharmaceutical manufacturers, including us. Third-party royalties represent a significant percentage of our pretax income and operating cash flow. We have entered into several…
- PFE (Pfizer Inc.)
- FY2025 10-K: …of generic drugs, including from generic versions of competitors' branded products that lose their market exclusivity, is a major challenge for our branded products. Certain of our products have experienced significant generic competition over the last few years. We anticipate a significant reduction of revenue from…
- FY2025 10-K: ProductsMember pfe:BiopharmaSegmentMember 2025-01-01 2025-12-31 0000078003 pfe:B7H4VFelmetatugVedotinMember us-gaap:InProcessResearchAndDevelopmentMember pfe:BiopharmaSegmentMember 2024-01-01 2024-12-31 0000078003 pfe:MedrolMember pfe:BrandMember pfe:BiopharmaSegmentMember 2024-01-01 2024-12-31 0000078003…
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Economic-unit decomposition (SOTP): each disclosed business unit is assigned its native valuation basis before any multiple is applied. Operating units are valued on enterprise value; funded financial units are valued on their own common equity, because their borrowings fund earning assets rather than levering the parent. A company total is stated only once every material unit carries a supported value and the parent capital bridge reconciles.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.