Better Buy: Gilead Sciences vs. Biogen
Gilead Sciences (NASDAQ: GILD) and Biogen (NASDAQ: BIIB) are two cheap stocks for healthcare investors to consider today. Neither stock has performed particularly well over the past few years, and both have significant question marks. They're risky buys, but if they perform well in 2020, their share prices could take off. Let's take a look at which one is the better buy for not just this year, but for the long term as well.
In five years, Gilead's share price has fallen by more than 35%, and over the past 12 months its returns have been flat. In contrast, the Health Care Select Sector SPDR Fund has risen by 45% in five years and increased by 22% in the last year. Gilead's been an underperformer for years, as not only have its sales been shrinking from $32.6 billion in 2015 to just $22.1 billion in 2018, but profitability has also fallen from $18.1 billion to $5.5 billion during that time.
While HIV product sales of $14.6 billion in fiscal 2018 rose by 12% from the prior year and are up 25% in two years, there's been a more profound decline in the sale of Harvoni during that time. Harvoni treats patients who have Hepatitis C, and in 2016 its product sales totaled $9.1 billion. The drug then declined to just $1.2 billion in 2018, decreasing more than 86% in only two years. The change in Gilead's product mix is also likely the reason for the change in its product gross margin, which in 2016 was 86% and is now at 78%. Falling sales along with a declining gross margin only make it more difficult for the company to cover rising expenses.
Source Fool.com
