Gilead Sciences Just Won Its Third FDA Approval in Less Than 4 Months. Is the Stock Still Underrating This Turnaround Play?

Gilead Sciences (NASDAQ: GILD) has no major concerns about its HIV franchise until the next decade. That hasn't kept the pharmaceutical company from preparing for the loss of exclusivity for its legacy HIV therapies. Gilead has spent heavily on its pipeline, and that's paying off.

The company has received three Food and Drug (FDA) approvals over the past four months, and not coincidentally, its shares are up more than 21% so far this year, nearly doubling the S&P 500 index's rise. The most recent approval was on Aug. 27 for Bixlenvo as a daily pill to treat virologically suppressed adults with HIV.

Prior to that, on June 24, Trodelvy received two new approvals to treat triple-negative breast cancer. On May 22, the FDA granted Hepcludex accelerated approval to treat chronic hepatitis delta virus (HDV) infection in adults without cirrhosis or with compensated cirrhosis.

Image source: Getty Images.

More approvals are on the way

Multiple myeloma therapy anito-cel could begin generating revenue as early as the end of this year. The BCMA-directed CAR T-cell therapy showed a 96% overall response rate and 74% complete response rate in heavily pretreated patients. The drug's Prescription Drug User Fee Act (PDUFA) target date is Dec. 23.

The company looks like a bargain on several fronts

The company, whether you look at trailing earnings or forward earnings, is priced well below its competitors, with the lone exception of GSK. Gilead allows investors to be patient by combining a growing dividend with opportunistic stock buybacks, including $774 million in the first half of 2026. Both provide defensive downside protection for investors.

Gilead raised its quarterly dividend by 3.8% this year to $0.82, the 11th consecutive year it has increased its dividend. The dividend yield is above average at 2.15% of the stock's current price. The company has boosted its dividend by nearly 75% over the past decade.

Financially, the company's footing is solid. It reported $7.6 billion in revenue in the second quarter, up 8% year over year, and said it expects yearly revenue to be between $30.1 billion and $30.4 billion, compared to $29.44 billion in 2025. Q2 adjusted earnings per share (EPS) were $2.27, up 13% over the same period a year ago.

Dominant HIV cash generation

Gilead maintains an industry-leading position in the HIV prevention and treatment market. Its flagship daily regimen, Biktarvy, commands significant market share with a patent runway extending to 2036. Descovy has a patent runway that ends in 2031 but likely will extend with successful litigation defense and strategic generic settlements.

Biktarvy had $3.8 billion in Q2 sales, up 8% year over year. For the first time in Q2, the company topped $1 billion in PrEP sales, up 101% year over year. The rise was led by Descovy, with sales of $801 million, up 60% over the same period last year. In 2024, Gilead said it plans seven new HIV launches by the end of 2033, and it seems to be following through on that promise.

Concerns, but definitely a buy

The market, while weighing the company's overreliance on HIV therapies, often underappreciates the strength of Gilead's underlying gross margins, which are consistently above 80% and were 87% in Q2. Those margins grant management financial flexibility to navigate macroheadwinds and execute disciplined bolt-on acquisitions without taking on unmanageable balance sheet risk. The company has improved its debt-to-equity ratio by more than 34% over the past decade.

Crucially, Gilead is positioning itself for a multi-decade growth phase through breakthrough innovations in long-acting HIV prevention and treatment. The cornerstone of this shift is Yeztugo, an oral PrEP option that promises to redefine HIV prevention standards and usher in a massive new market expansion.

James Halley has positions in GSK. The Motley Fool has positions in and recommends Gilead Sciences and Merck. The Motley Fool recommends GSK. The Motley Fool has a disclosure policy.