One good year leads to another. That's typically been the pattern for the Nasdaq Composite index since its creation in 1971. The positive years for the index outnumber the negative years by nearly 3 to 1.
History is on the side of investors hoping for the Nasdaq to keep soaring in 2024. Unsurprisingly, analysts are bullish about many of the stocks that are in the index. But are there any good picks for income investors in the group? Yep -- and some of them offer especially juicy dividends. Wall Street thinks one high-yield dividend stock, in particular, could jump nearly 20% over the next 12 months.
Great expectations
The consensus Wall Street 12-month price target for Gilead Sciences (GILD 0.23%) reflects an upside potential of between 19% and 20%. The most optimistic analyst surveyed by LSEG thinks that the biotech stock could soar 64% higher.
Such a strong gain would be a major improvement over Gilead's performance over the last 12 months. The drugmaker's share price has fallen by a double-digit percentage while the Nasdaq Composite has skyrocketed more than 30%.
Gilead's dividend payouts have cushioned the below somewhat, though. The company's dividend yield currently tops 4.2%. Earlier this month, Gilead announced a 2.7% dividend increase, its ninth consecutive year of dividend hikes.
What analysts like about Gilead Sciences
Why do analysts like Gilead Sciences' near-term prospects? For one thing, the stock is attractively valued. Gilead's forward price-to-earnings ratio is only 10.2x. The average forward earnings multiple for the S&P 500 healthcare sector is over 19x.
Gilead's HIV drug Biktarvy continues to perform well. In the fourth quarter of 2023, Biktarvy's sales increased by 7% year over year to $3.1 billion.
Oncology is an even bigger growth driver for the company. Combined Q4 sales for cell therapies Yescarta and Tecartus jumped 11% year over year to $466 million. Trodelvy, though, remains the brightest star for Gilead. The cancer therapy raked in sales of $299 million in Q4, up 53% from the prior-year period.
Wall Street also no doubt likes Gilead Sciences' hefty cash stockpile. The big biotech ended 2023 with cash, cash equivalents, and marketable debt securities totaling $8.4 billion.
Gilead is putting some of that cash to work. Earlier this month, the company announced plans to acquire CymaBay Therapeutics in an all-cash deal valued at $4.3 billion. The transaction will add CymaBay's promising primary biliary cholangitis candidate seladelpar to Gilead's portfolio. The U.S. Food and Drug Administration has set a PDUFA date of Aug. 14, 2024, to make an approval decision on seladelpar.
Is Wall Street right about Gilead?
Perhaps Gilead Sciences will deliver gains over the next 12 months that meet or exceed Wall Street's expectations. However, I wouldn't bet on it.
COVID-19 antiviral therapy Veklury continues to serve as a significant drag on overall revenue growth. Gilead projects that sales for the drug will decline by close to $1.3 billion in 2024.
While Biktarvy's momentum remains strong, the rest of Gilead's HIV franchise isn't performing so well. Sales for Complera/Eviplera, Descovy, Genvoya, Odefsey, Stribild, and Truvada fell year over year in Q4.
The growth prospects for Trodelvy have also diminished somewhat. In January, Gilead announced that the drug failed to achieve the primary endpoint of overall survival in a phase 2 clinical study targeting previously treated metastatic non-small cell lung cancer.
That wasn't the only recent pipeline setback for Gilead. Results from the company's late-stage study of oral COVID-19 therapy obeldesivir were also disappointing with the primary endpoint not met.
Gilead should have more than half a dozen clinical trial updates on the way this year. Good news from these studies could provide much-needed catalysts. For now, though, I think Gilead's dividend continues to be the best thing going for the stock.
