Bernstein analysts evaluate how Gilead and Alexion stocks are more attractive than Regeneron, Amgen and Biogen.
Gilead Sciences Inc. and Alexion Pharmaceuticals Inc. looks to be the most appealing stocks after the latest sell-offs, as per analysts at Bernstein, Vincent Chen and Geoffrey Porges. The analysts have reaffirmed an Outperform rating and $131 stock price target on Gilead Sciences Inc., Alexion stock has also given Outperform rating with $250 stock target price.
The analysts said that stocks of company’s such as Biogen Inc. and Regeneron Pharmaceuticals Inc. might look better valued amid other stock of biotech industry, but Alexion and Gilead will remain the most attractive stock. The analysts have assigned an Outperform rating on all these stocks, except for Amgen, which has got Market Perform rating.
Followed by the selloffs, lately the valuation multiples for the industry look better compared to the market. The shares are currently more nicely priced than their prices over the last few years.
After the recent downturn in the stock market, the P/S and P/E ratios have slumped from levels, which were substantially, better than their past ratios, to levels which are according to the past ratios, and relatively lower than historical medians.
Gilead Science’s current price to earnings ratio is 8.7x, somewhat lower than its twelve month historic price to earnings ratio of around 10.5x. Similarly, its P/S ratio stands at 4.8x, marginally lower than its twelve month P/S ratio of 5.5 times.
The note states “Our analysis suggests biotech is generally cheaper, on an absolute and a relative basis based on earnings rather than revenue, but this suggests that expectations for revenue upside remain elevated.”
Talking about revenue, the analysts are optimistic that majority of stocks are presently trading in-line with their past medians, opposing to the high-levels they touched in the last few quarters. The analysts specified that any investment in these stocks for the time they are in their latest range is expected to be rewarded.
According to the report, amid the large cap bio-tech companies covered by the experts, Gilead, Regeneron and Biogen have reflected the maximum multiple compressions since the stock reached its year to date highs during mid-year. Gilead Sciences touched its all-time high of $123.37 in July, and is currently trading at $101.49.
Almost 26 analysts covered the Gilead, out of whom, 22 gave it a Buy, 3 suggests a Hold, while only 1 rated the stock as Sell. As per consensus estimate of around 18 analysts, the twelve month stock price target stands at $128.5.
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