Gilead Sciences: Much Ado About Nothing

Summary

A 18-month Senate investigation report was released this week that put Gilead's pricing for its blockbuster hepatitis C drugs Sovaldi & Harvoni back in focus.

Although this scrutiny is a temporary headwind, little if anything will likely change as the result of the report.

Investors should ignore it and instead concentrate on the investment case for Gilead which is exceedingly cheap both on an earnings and free cash flow basis.

Gilead Sciences (NASDAQ:GILD) was in the news this week and not in a good way. A 18-month Senate investigation report compiled from 20,000 company documents that was released by the Republican Sen. Charles Grassley and Democrat Sen. Ron Wyden showed the company considering price ranges from $50,000 to $115,000 per treatment to "max out" revenue for its blockbuster hepatitis C drugs Sovaldi and Harvoni. Gilead ultimately decided on a list price in the middle of that range.