Gilead Sciences Surges 26.5% YTD: Buy, Sell or Hold the Stock?

Gilead Sciences (GILD) shares have climbed 26.5% year-to-date, significantly outpacing broader market benchmarks, primarily fueled by the FDA approval of Yeztugo, the first twice-yearly injectable HIV prevention drug, which is set to boost 2025 HIV sales. The company's diversified portfolio also benefits from strong performance in oncology (Trodelvy) and liver disease (Livdelzi), alongside strategic acquisitions, despite competitive headwinds impacting its cell therapy franchise. With upward-revised 2025 earnings estimates and a sustainable 2.76% dividend yield, GILD demonstrates a resilient growth trajectory.

Analysis

Gilead Sciences (GILD) has demonstrated significant market outperformance, with its stock surging 26.5% year-to-date, well ahead of the industry's 6% growth and broader market indexes. This momentum is primarily driven by the strengthening of its core HIV franchise, highlighted by the FDA and European Commission approval of Yeztugo (lenacapavir), the first twice-yearly injectable for HIV prevention (PrEP). This approval is a critical catalyst, solidifying GILD's market leadership against generic competition for Truvada and providing a competitive advantage over daily oral pills. Consequently, the company has upgraded its 2025 HIV sales forecast from flat to approximately 3% growth, supported by the continued dominance of its flagship drug Biktarvy, which commands over 51% of the U.S. treatment market. While the diversification strategy shows promise with the strong performance of oncology drug Trodelvy and the encouraging initial uptake of the newly approved liver disease treatment Livdelzi, the portfolio faces headwinds. The Cell Therapy franchise (Yescarta, Tecartus) is under significant competitive pressure, which is expected to persist through 2025. Financially, GILD's valuation at 13.62x forward earnings is below the industry average of 14.83x but above its own historical mean. 2025 earnings estimates have been revised slightly upward to $8.10, though 2026 estimates saw a minor reduction to $8.50. The company's financial health remains robust, with a $7.1 billion cash position supporting substantial capital returns, including a sustainable 2.76% dividend yield and $527 million in share buybacks in Q2 2025.

Key Decisions for Investors

• Current investors may find it prudent to hold their positions, capitalizing on the solid growth outlook for the core HIV franchise following the Yeztugo launch and a sustainable 2.76% dividend yield backed by a strong cash position.
• Prospective investors should exercise caution, as the stock's 26.5% year-to-date rally may have priced in recent positive developments, and should monitor for a more favorable entry point while assessing the ongoing competitive headwinds impacting the Cell Therapy division.
• Key catalysts to monitor include the progress of the regulatory filing for Trodelvy in the first-line breast cancer setting and the anticipated phase III update in 2026 for the combination HIV treatment being developed with Merck.