Gilead Sciences, Inc. (GILD), Celgene Corporation (CELG): Have You Considered Biotech Yet?

We are in the midst of the earnings season, my favorite time of the year. Some of the largest and most powerful publicly traded firms have already reported their second-quarter earnings with a few still left to report. Among those that have already announced their results are two biotechnology favorites, Gilead Sciences, Inc. (NASDAQ:GILD) and Celgene Corporation (NASDAQ:CELG).

In recent weeks, I recommended investors to buy both these names on broad market weakness. If you did, you would have done well with a 30% return on Gilead Sciences, Inc. (NASDAQ:GILD) alone. In this article, I would review the most recent quarterly fillings and see how these companies might perform in the future.

Approaching $100 billion

Gilead Sciences, Inc. (NASDAQ:GILD) is no longer the mid-sized biotechnology company it used to be just last year. After a sharp 5% move to the upside following the report, Gilead Sciences, Inc. (NASDAQ:GILD)’s market cap approached the $100 billion mark. The company reported net income of $772.6 million, or $0.46 per share, an 8.5% increase from $711.6 million reported in the second quarter of last year.

The strong results were fueled by a good showing from the company’s two best selling HIV medications, Atripla and Truvada. The two drugs performed well, with sales up 4% and 3%, respectively. Total product sales increased 14% to $2.66 billion for the period ended June 30. Moreover, Gilead Sciences, Inc. (NASDAQ:GILD) reported strong growth in its new, single tablet HIV combination of Complera and Eviplera where sales rose a whopping 159% to $188.7 million.

As of today, the company is dabbling in various areas such as HIV, AIDS, liver disease, cardiovascular, respiratory, oncology, and inflammation. In every one of these categories, Gilead Sciences, Inc. (NASDAQ:GILD) has at least one drug pending approval or in Phase 3 trials. The company has truly separated itself from the pack through diversification and sheer volume. Analysts are expecting 10% growth this year, followed by 47.2% growth next year. Even with a sharp move to the upside this year, the stock doesn’t look overpriced with a PEG ratio of only 1.20.

The diversified, fund favorite

Celgene Corporation (NASDAQ:CELG) reported yet another strong quarter. After all, the company has a long history of reporting better-than-anticipated results. The company reported $1.52 earnings per share for the quarter, beating the analyst estimate of $1.44. Net income for the quarter rose alongside revenue, due in large part to shareholder buybacks and a strong performance from its portfolio. Celgene Corporation (NASDAQ:CELG) actively pursues treatments across the disease spectrum. Everything from Myeloma, MDS, Acute Myeloid Luekemia, Lymphoma, Anemia, and Inflammation are in focus.

In terms on cancer-related progress, the company has 22 treatments awaiting FDA approval and an additional 12 treatments currently making way through Phase 3 trials. Revlimid, the company’s best seller, accounted for 67% of revenue while growing at 13% on a year over year basis. Despite patent expiration, the company’s Vidaza held up well with $211 million in revenue.