Gilead: Temporarily 'Dead Money' Or Is The Investment Case 'Dead?'

Summary

The shares of Gilead Sciences have pulled back after quarterly results showed sales of hepatitis C franchise are falling faster than expected.
It has been a frustrating 18 months for Gilead shareholders as management has been slow to act on the acquisition front and the shares sell for a very low multiple.
So is the investment case on holding this large cap biotech concern "dead" or are the shares just temporarily "dead money." We do a sum of the parts analysis below.

"Genius is eternal patience." - Michelangelo

It has been a more than frustrating 18 months for shareholders of Gilead Sciences (NASDAQ:GILD), especially recently as hepatitis C sales are declining at a faster than expected pace currently. In addition, management continues to not move on making a significant acquisition which investors and analysts have been clamoring for. So is the investment case on Gilead "dead" or are the shares just temporarily "dead money". We do a sum of the parts analysis below to determine the answer.

Non-Hepatitis C Business:

As of market close on Friday, Gilead Sciences had a market capitalization of approximately $107 billion. Let's start the evaluation of the investment case on this large biotech company with the part of Gilead's business that gets too little focus these days, its products outside of its hepatitis C franchise. This accounted for $3.85 billion in revenue in the last quarter, up from $3.34 billion the same period a year ago. This sales surge was led by the company's HIV franchise which is the vast majority of non-hepatitis C revenues and grew 19% year-over-year thanks to the rollout of the next generation of HIV products.