Galena Biopharma Inc (GALE), Gilead Sciences, Inc. (GILD): Two Biopharmaceutical Companies Worth Buying

A large cap idea

Gilead Sciences, Inc. (NASDAQ:GILD) is probably the best placed biotechnology company on the stock market. It is not only relying on its pipeline for its valuations, but has a steady stream of cash flows from its drugs already available in the market. Gilead currently dominates the Aids and Hepatitis market space with Truvada and Quad. The company has also received the FDA approval for the use of Truvada for the prevention of HIV for people in high HIV risk profession.

In the last one year, the stock has appreciated a mammoth 110%. This appreciation has been a result of positive FDA action regarding Gilead Sciences, Inc. (NASDAQ:GILD)’s candidates and high earnings visibility from the antiviral segment. In the last six months, insiders have sold approximately 12.1 million shares of the company, which reduces total insider ownership by 17%.

During the same interval, institutions have also sold approximately 42 million shares of Gilead Sciences, Inc. (NASDAQ:GILD), which reduces institutional ownership by 3%. These sales are more due to investors taking profit after a super run rather than any negative catalysts.

Gilead is currently trading at a P/E of 18.9x and pretty close to the mean sell side target price of $55. 25. Analysts have a ‘buy’ or ‘strong buy’ recommendation on the company and only four have a hold recommendation.

Conclusion

Galena Biopharma Inc (NASDAQ:GALE) and Gilead Sciences, Inc. (NASDAQ:GILD) are both strong buys at these levels. Galena has more upside potential because it is an attractive takeover target at these levels. The company will be an ideal fit for AstraZeneca because it is available at pretty cheap valuations, and also because it falls into one the three focus areas, Oncology.

The article 2 Biopharmaceutical Companies Worth Buying originally appeared on Fool.com.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.