Should You Buy Gilead Sciences Before Feb. 10?

Over the past two quarters, biotech leader Gilead Sciences (NASDAQ: GILD) has delivered results that exceeded analyst expectations. That's one of the reasons the stock is up 52% over the trailing-12-month period. The drugmaker is set to report its fourth-quarter earnings on Feb. 10 after the markets close. Several factors to watch could signal Gilead Sciences' medium-term outlook. Should investors buy the stock before then?

Look for strength in Gilead's core market

Gilead Sciences' biggest growth driver for a while has been its HIV drug portfolio, particularly Biktarvy, one of the top prescribed HIV regimens. Sales growth hasn't been exceptional for Biktarvy or across Gilead Sciences' entire lineup, but Gilead Sciences' performance has been decent given strong competition and lower sales from other products, including its coronavirus therapy Veklury. For the third quarter, total revenue increased 3% year over year to $7.8 billion. Sales climbed 4% excluding Veklury. Biktarvy's revenue was up 6% year over year.

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For the full fiscal year 2025, Gilead Sciences expects product sales of $28.6 billion at the midpoint, which would remain flat compared to 2024. Several things could lead to a revenue beat. For instance, last year, Gilead Sciences announced that the U.S. Food and Drug Administration had approved Yeztugo, an HIV medicine that can be administered every six months, the first of its kind.

If Yeztugo uptake is stronger than the company expects and starts contributing meaningfully to its financial results, Gilead Sciences' shares could jump after its upcoming earnings release.

Is the stock a buy now?

Yeztugo could be an important growth driver for Gilead Sciences for a while, with analysts predicting peak sales of $4.5 billion for the medicine. However, Gilead Sciences has struggled to diversify beyond its core therapeutic area. It has sought to make a push in oncology, where it has achieved some success, but oncology sales have been declining and did so again in the third quarter.

Gilead Sciences does have a vast pipeline, with many cancer programs in development, as well as other HIV candidates. Sales growth could improve meaningfully in the next few years as Veklury's impact on Gilead Sciences' results fades, and the company earns new approvals and label expansions, especially in oncology. Meanwhile, Gilead Sciences' shares look reasonably valued, trading at 16.6 times forward earnings compared with an average of 18.7 for the healthcare sector.

Gilead Sciences is also an attractive dividend stock. Its forward yield of 2.2% is higher than the S&P 500's average of 1.2%, while it has increased its payouts by 83.7% over the past decade. After its recent run, the upside for the stock is limited in my view (don't expect 52% gains in the next 12 months), but for investors looking for stable income payers, Gilead Sciences is worth considering before it reports its fourth-quarter earnings tomorrow.

Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Gilead Sciences. The Motley Fool has a disclosure policy.