Gilead Sciences Inc. (NASDAQ:GILD)
Gilead Sciences breaks out of a trading range with the
possibility of moving higher on analyst’s upgrades, improving profitability and
a patent infringement case against Teva Pharmaceuticals.
Trading Range Breakout
For the past three months, Gilead
Sciences has been trading between $47.50 a share on the high side of a range
and $41.50 a share on the lower end of a trading range. Just recently the stock
has pushed through the upper end of the range reaching an intraday high of
$49.77. At the same time the stock’s 13 day moving average crossed above its 50
moving average technically signaling a buying opportunity.
Analysts Upgrade Gilead
Sciences was upgrade by Merrill Lynch on Tuesday with a new $55 target and improved
earnings expectations due to the companies HIV treatments. Over the past 90
days analysts have increased the companies expected earnings from 52 cents a
share to 55 cents a share for the current quarter. For the current year,
analysts are now expecting earnings to come in $2.05 a share compared to
previous expectations of $1.98 a share.
Teva Pharmaceuticals Case
of last week, Gilead Sciences filed a patent infringement suit against generic
drug manufacturer Teva Pharmaceuticals. The case is based on a patent Gilead
holds for emtricitabine which is a compound licensed from Emory University
and used in Truvada to treat adults with HIV infections. Teva is attempting to
produce and market a generic form of Truvada prior to the patent on emtricitabine
expiring. Stopping Teva from doing so will be beneficial to Gilead’s
earnings going forward.
Therefore, a number of positive items
have led to a technical buy signal in Gilead
this week that is an opportunity to purchase the shares before they appreciate
more. Analysts anticipating high earnings for the company are the first
important piece of news that provides the stock with some positive momentum
higher. In addition, the lawsuit against Teva provides an insurance against one
of the companies drugs losing market share prior to its patent expiration.