Near a 7-Year Low, Is Gilead Sciences a Buy?
Buying a stock near its low can be a good way to lock in a low price and hopefully set yourself up for some stronger returns later on. In the case of Gilead Sciences (NASDAQ: GILD), the stock isn't just at a 52-week low -- it's trading at around the lowest it has been in seven years. While the stock has occasionally dipped lower than the $63 that it trades at today, the last time that the stock was below that mark for an extended period of time was back in 2013 when it was on its way up.
Over the past year, Gilead's stock has declined by 7%, even as the Health Care Select Sector SPDR Fund has risen 17%. It may be tempting to believe that Gilead has bottomed out and it's due for a rally. But it's important to first understand why the stock is struggling as badly as it is, whether it can recover, and whether the stock is a good value at its current price, or if it is only likely to decline further.
It's no big mystery why Gilead is struggling. The company just isn't producing the results that it once did. In 2018, sales of $22.1 billion were down more than 27% from the $30.4 billion that Gilead reported in 2016. Its margins have been shrinking as well. Through 2014 to 2016, Gilead's net profit margin didn't fall below 40%, but in 2018 it was only 25% -- which was still an improvement from 18% the year before.
Source Fool.com
