After releasing downright worrisome first-quarter results, Gilead Sciences (NASDAQ:GILD) has seen its shares drop by a noteworthy 11.7% in the past few days. The big concern is that Gilead's ailing hepatitis C franchise has yet to stabilize in the wake of newfound competition from AbbVie's (NYSE:ABBV) Mavyret. 

For instance, the company reported that first-quarter hepatitis C drug sales came in at $1 billion, reflecting a 59% year-over-year downturn and a 30% quarter-over-quarter drop. With AbbVie's drug just starting to gain commercial momentum, Gilead's hepatitis C franchise appears set to continue falling in the quarters ahead. 

But is the market making a mountain out of a molehill? After all, Gilead does have a solid HIV franchise to fall back on, a stellar clinical pipeline, and one of the best cash positions in the industry. With these facts in mind, let's consider if this top biotech stock is worth picking up after this sudden decline. 

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Gilead as a value play

At 10 times forward earnings, Gilead definitely qualifies as a value stock at this point. AbbVie, a stock that had its own share of problems this year, after all, is still trading at over 11 times forward earnings, and the vast majority of Gilead's immediate peer group (large-cap biotechs) are trading at valuations well north of 13 times forward-looking earnings. In fact, Celgene and Shire are the only large-cap biopharmas with lower valuations based on this particular metric right now. 

Gilead's rock-bottom valuation, though, could be a misleading indicator if its hepatitis C sales fail to stabilize by mid-year, as the company predicts. So, as a near-term value buy, this stock does require a leap of faith of sorts. If management is wrong, and hepatitis C sales accelerate to this downside even further, Gilead's shares are sure to print new lows as a result. 

Still, Gilead does have some compelling clinical assets and more than enough cash to create value for long-term oriented shareholders. The biotech's various clinical assets in non-alcoholic steatohepatitis and anti-inflammatory drug candidate filgotinib both have the potential to generate several billion in sales at peak.

Gilead's deep dive into cellular therapeutics with the acquisitions of Kite Pharma and Cell Design Labs, along with the subsequent licensing deal with Sangamo Therapeutics to develop off-the-shelf cell therapies, is another key value creator that's arguably being under-appreciated by the market. Adoptive cell therapy for hard-to-treat blood cancers, after all, are widely expected to be the standard of care within a decade, and it should therefore grow to become one of the most lucrative markets in all of biotech. 

Apart from its rich clinical pipeline, Gilead also has one of the largest cash positions in biotech. The company exited the most recent quarter with a jaw-dropping $32.1 billion in cash and investments. That's more than enough to go on a shopping spree to add some much-needed revenue in the event that hepatitis C sales fail to find a bottom soon.

What's the verdict?

The market was probably right to revalue Gilead after this latest earnings fiasco. The company sorely needs new sources of revenue given that its clinical pipeline isn't all that close to delivering another major blockbuster. A longer-term outlook, though, suggests that Gilead is still in excellent overall shape -- despite its faltering share price and falling revenue.

Eventually, Gilead will bring at least some of its other value drivers in cancer, inflammatory diseases, and non-hep C liver diseases online. Perhaps some of these endeavors will go askew, but there's enough here to consider Gilead as a strong value play over the long haul. Gilead, after all, still has the option of literally buying its way out of this funk if things don't pick up soon. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.