Ask Matt: Can Gilead regain its stock mojo?

Q: Can Gilead regain its stock mojo?

A: When it comes to blockbuster business, it’s tough to beat Gilead Sciences (GILD). But it hasn’t been a blockbuster stock this year.

Gilead is a top developer of medicines that treat conditions where there are few options. The company’s biggest homerun in recent years is its hepatitis C drug that saw revenue leap from “zero to $20 billion in two years,” says Geoffrey Porges, analyst at Leerink Partners. “That’s unheard of.” Due to the rapid spike in revenue, Gilead’s profit margins soared, hitting more than 60% over the past 12 months based on operating earnings before interest and taxes, says S&P Global Market Intelligence. That makes Gilead the most profitable biotech company in the Standard & Poor’s 500. That’s impressive if you consider biotech is the third most profitable industry. But while the business is strong, the stock hasn’t been this year. Shares of Gilead are down 18% this year. The stock has been under pressure as investors worry Gilead’s hepatitis C drug’s profitability might erode due to competition, says Michael Yee, of RBC Capital Markets. Analysts remain bullish, though, calling for the stock to rise 30% over the next 18 months.

Paste BN markets reporter Matt Krantz answers a different reader question every weekday. To submit a question, e-mail Matt at mkrantz@usatoday.com or on Twitter @mattkrantz.