Gilead (GILD, $66.34) to acquire Immunomedics Inc for $21 billion, to strengthen cancer portfolio

Biopharmaceutical company Gilead Sciences Inc will acquire biotech company Immunomedics Inc for $21 billion. The acquisition is expected to bolster Gilead’s cancer portfolio.

Gilead’s tender offer includes buying all the outstanding shares of Immunomedics for $88 per share, which implies a premium of about 108% over their closing price on Friday.

Through the deal, Gilead will have access to Immunomedics’ breast cancer treatment drug Trodelvy, which was granted an accelerated FDA approval in April. Immunomedics is also on track to file for regulatory approval for Trodelvy in Europe in the first half of 2021.

Trodelvy targets triple-negative breast cancer that has spread to other organs. The tumor types are aggressive and tough to treat.

“This acquisition represents significant progress in Gilead’s work to build a strong and diverse oncology portfolio,” Gilead Chief Executive Officer Daniel O’Day said in a statement. “Trodelvy is an approved, transformational medicine for a form of cancer that is particularly challenging to treat. We will now continue to explore its potential to treat many other types of cancer.”

According to Tickeron, GILD is in upward trend: price may ascend as a result of having broken its lower Bollinger Band on September 10, 2020

GILD may jump back above the lower band and head toward the middle band. Traders may consider buying the stock or exploring call options. In 25 of 43 cases where GILD's price broke its lower Bollinger Band, its price rose further in the following month. The odds of a continued upward trend are 58%.

Current price $66.34 crossed the support line at $64.63 and is trading between $66.73 support and $64.63 support lines. Throughout the month of 08/12/20 - 09/14/20, the price experienced a -3% Downtrend, while the week of 09/04/20 - 09/14/20 shows a +2% Uptrend.

Technical Analysis (Indicators)

Bullish Trend Analysis

The RSI Indicator points to a transition from a downward trend to an upward trend -- in cases where GILD's RSI Indicator exited the oversold zone, 12 of 27 resulted in an increase in price. Tickeron's analysis proposes that the odds of a continued upward trend are 44%

The Stochastic Indicator suggests the stock price trend may be in a reversal from a downward trend to an upward trend. 35 of 61 cases where GILD's Stochastic Oscillator exited the oversold zone resulted in an increase in price. Tickeron's analysis proposes that the odds of a continued upward trend are 81%.

The Momentum Indicator moved above the 0 level on September 11, 2020. You may want to consider a long position or call options on GILD as a result. In 49 of 104 past instances where the momentum indicator moved above 0, the stock continued to climb. The odds of a continued upward trend are 47%.

The Moving Average Convergence Divergence (MACD) for GILD just turned positive on August 31, 2020. Looking at past instances where GILD's MACD turned positive, the stock continued to rise in 25 of 49 cases over the following month. The odds of a continued upward trend are 51%.

Following a +5.12% 3-day Advance, the price is estimated to grow further. Considering data from situations where GILD advanced for three days, in 140 of 302 cases, the price rose further within the following month. The odds of a continued upward trend are 46%.

Bearish Trend Analysis

The 50-day Moving Average for GILD moved below the 200-day moving average on September 10, 2020. This could be a long-term bearish signal for the stock as the stock shifts to an downward trend.

The Aroon Indicator for GILD entered a downward trend on September 10, 2020. This could indicate a strong downward move is ahead for the stock. Traders may want to consider selling the stock or buying put options.

Fundamental Analysis (Ratings)

Tickeron has a positive outlook on this ticker and predicts a further increase by more than 4.00% within the next month with a likelihood of 55%. During the last month, the daily ratio of advancing to declining volumes was 1 to 1.09.

The Tickeron PE Growth Rating for this company is 37 (best 1 - 100 worst), pointing to consistent earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.

The Tickeron SMR rating for this company is 37 (best 1 - 100 worst), indicating strong sales and a profitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.

The Tickeron Valuation Rating of 57 (best 1 - 100 worst) indicates that the company is fair valued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (4.56) is normal, around the industry mean (4.25). P/E Ratio (19.15) is within average values for comparable stocks, (75.74). Projected Growth (PEG Ratio) (17.15) is also within normal values, averaging (5.27). GILD's Dividend Yield (3.88) is considerably higher than the industry average of (0.07). P/S Ratio (4.38) is also within normal values, averaging (998.88).

The Tickeron Price Growth Rating for this company is 60 (best 1 - 100 worst), indicating fairly steady price growth. GILD’s price grows at a lower rate over the last 12 months as compared to S&P 500 index constituents.

The Tickeron Profit vs. Risk Rating rating for this company is 100 (best 1 - 100 worst), indicating that the returns do not compensate for the risks. GILD’s unstable profits reported over time resulted in significant Drawdowns within these last five years. A stable profit reduces stock drawdown and volatility. The average Profit vs. Risk Rating rating for the industry is 94, placing this stock worse than average.