QS Research · Michael Burry's Scion Capital analyst template · 2006
GILEAD SCIENCES, INC. (GILD)
As of 2026-11-06 · 12/15 boxes filled from SEC filings and market data
Conclusion: PASS
Conviction medium · base case -5% · downside -32% · upside +28%
Using section 13's normalized FY2020-FY2025 base (average revenue $27.43B, average operating income $6.77B, average FCF $8.98B), an 8.0x EV/Sales scenario gives $219.44B EV, less $22.82B net debt including leases = $196.62B equity, or $158.52/share, -5.1% from $166.98. The 6.0x downside is $114.29 (-31.5%) and 10.5x upside is $213.81 (+28.1%) on the same base, so the reward/risk is not favorable enough for a long and the upside is too large for a short. TTM revenue is $30.99B and TTM FCF $13.78B, but TTM net income is -$3.86B on IPR&D, so the market is not missing a cash collapse; it is pricing a fairly valued cash generator with pipeline optionality. At 7.40x TTM EV/Sales the price already needs the upper peer cluster, so the call is pass.
Key numbers
- Share price: $166.98
- Market cap: $207.11B
- Latest financial period: TTM to Sep 30, 2026
- Revenue (TTM): $30.99B
- Price / book: 15.88x
The 15 boxes
- ✓ 1. Long-form business notes
Gilead is a virology-led biopharma: FY2025 revenue was $29.44B, up from $24.69B in FY2020, with more than 25 marketed therapies anchored in HIV (Biktarvy, Descovy, Genvoya, Sunlenca, Yeztugo) plus liver disease, oncology/cell therapy and Veklury. Operating income swung hard across the six XBRL years — $4.07B (FY2020), $9.92B (FY2021), $7.33B (FY2022), $7.61B (FY2023), $1.66B (FY2024), $10.02B (FY2025) — and in FY2020 and FY2024 pre-tax income fell far below operating income ($1.67B vs $4.07B; $690.0M vs $1.66B), so those net income lines ($123.0M and $480.0M) must not be read as the earnings power of the business. Cash generation is steadier than reported earnings: operating cash flow was $10.02B in FY2025 against $563M of capex. Between the FY2020 and FY2025 10-Ks the portfolio rotated — older HIV and HCV tablets and the PAH/angina drugs drop off the product list while Sunlenca, Yeztugo (PrEP) and Livdelzi (PBC) appear.
- ✓ 2. Competitive advantage
The sources support only a thin, patent-based moat, not a brand or cost advantage: Gilead's own 10-K states "We operate in a highly competitive environment" and lists price and reimbursement coverage among the bases of competition, while warning that payer pressure "often result in a reduction of our net product prices." What protection exists is exclusivity life (Biktarvy U.S. patent 2036, but Descovy/Vemlidy/Odefsey EU patents 2027; Trodelvy U.S. patent 2028 with U.S. regulatory exclusivity to 2032), and it has already been litigated and settled with generic manufacturers. On the cyclical read, reported operating income swings widely — $4.07B FY2020, $9.92B FY2021, $7.33B FY2022, $7.61B FY2023, $1.66B FY2024, $10.02B FY2025 — while operating cash flow stayed within $8.01B-$11.38B every year, so cash flow is the steadier series to normalize over the cycle.
- ✓ 3. 10-Q takeaways
Q3 2026 revenue grew 7% to $8.3B and product sales rose 13%, with HIV and Trodelvy offsetting Veklury and cell-therapy declines; product gross margin was 81.0%. Q3 net income was $2.429B, down 20%, partly on equity-securities losses, while the nine-month net loss of $6.045B is dominated by $11.307B acquired IPR&D and a $1.75B IPR&D impairment. Cash was $6.4B and nine-month operating cash flow was $11.152B; buybacks were lower and a $0.82 quarterly dividend was declared. No numeric guidance was given in the 10-Q; dated items include Biktarvy Medicare MFP from 2028, PDUFA dates, and policy/tariff/shutdown risks.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ○ 11. Impression of the shareholder letter
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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