Gilead Sciences (GILD), the Foster City, California-based biotech player has been one of the outstanding performers in the industry over the last twelve months. Gilead's last four quarters have been excellent. Its earnings have beaten analyst estimates on each of those occasions by 8.33% in Q3, 2013, 10% in Q4, 2013, 62% in Q1 this year, and 31% in Q2. Analysts are expecting an EPS of $1.89 per share, but based on past results, the company seems to have a realistic chance of blowing this estimate, yet again. 

In fact, the current EPS estimate is below the actual figure of $2.36 per share posted in Q2. Therefore, it makes perfect sense to believe that the analysts may be underestimating the company's Q3 EPS. The compelling EPS is one of the reasons the company's share price has been rising this year, and if it continues to beat analyst estimates, then this rally could continue.

Furthermore, Gilead's product pipeline, which includes HIV/AIDS, liver, cardiovascular and respiratory disorder treatment drugs have been delivering top results over the years and continue to show great promise in the coming quarters. Sovaldi, a Hepatitis C treatment drug acquired from Pharmasset in 2012 has been one of the standout performers. According to the company’s Q2 results, Sovaldi contributed $3.5 billion to the overall revenue of $6.5 billion. That is more than 50%.

On the other hand, Gilead’s HIV treatment drug, Atripla added $800 million to the company’s top line. This might seem to be a smaller chunk of the overall revenue, but the company has some exciting products in the pipeline that could boost the unit in the coming quarters. Gilead has two HIV/AIDS drugs (Cobicistat and Elvitegravir) submitted for U.S regulatory approval. Both drugs are approved in the E.U as Tybost and Vitekta respectively.

There are also other drugs in various stages of clinical development, and this guarantees continuous product development and sustainable revenue growth.

Gilead boasts a strong balance sheet with a leveraged free cash flow of $5.85 billion. Its current ratio of 2.49 indicates that the company is in a good position to settle any short-term maturing obligations, thereby putting its credit rank at par. Additionally, the company’s strong operating and profit margins of 42.80% and $56.15% means that the company is in a position to continue generating cash flows to back the development its expansive product pipeline.

Gilead is rewarding investors handsomely with a return on equity of 53.55%, and also demonstrates an impressive utilization of its assets with a return on assets of 22.74%.

Conclusion

Chart via Quantshare.com

Based on trading activity over the last six weeks, Gilead seems to have developed support and resistance at $100 and $110 respectively. The company has shown magnificent performance over the last four quarters. It also seems set to continue with those performances in the near future. The company also appears to have strong fundamentals while product pipeline remains promising.

This is why Gilead is likely to have another advance soon. Currently it appears to be taking a breath, after an impressive rally as consolidations take place with some investors opting to take profits from their investments in the stock. So, is Gilead done running? I believe it still has some room to run.