The stock market doesn't always make sense or act on rational terms. Sometimes good stocks are sold off for little or no reason.

That appears to be the case with Gilead Sciences (NASDAQ:GILD). Gilead's shares have tanked due to pricing pressure from AbbVie's newly approved hepatitis C combo therapy Viekira Pak. Specifically, investors have steadily marched out of the stock after management announced a whopping 46% price discount for Gilead hep C treatments Sovaldi and Harvoni during the company's fourth-quarter conference call. The net result has been this:

GILD Chart

It appears to me that investors decided to completely ignore all the fantastic news emanating from the company. In fact, this massive sell-off makes absolutely no sense when viewed against Gilead's staggering growth metrics and value proposition going forward. 

With this in mind, let's dig into the company's latest earnings release and consider why shares are perhaps shockingly cheap at current levels.

Any way you slice it, Gilead is cheap
If we begin by simply comparing Gilead's 12-month trailing P/E and forward P/E ratios, calculated using generally accepted accounting principles estimates of earnings per share, to some of its closest peers, a clear and consistent pattern becomes evident. Simply put, Gilead is one of the cheapest large-cap healthcare stocks around, as shown by the table below:

Company Trailing P/E Fwd P/E
AbbVie 51.5 11.3
Celgene Corp. 49.5 18.7
Pfizer 24.1 24.1
Gilead Sciences 13.6 9.49
Johnson & Johnson 17.6 15.3

But P/E ratios can never tell the full story and perhaps only offer limited insight into a biotech's true value proposition. For that, we need to look at Gilead's revenue projections for 2015, as well as consider the company's clinical pipeline.

Source: Gilead

Revenue streams are overflowing
In 2014, Gilead grew its revenue to $24.5 billion, up a mind-boggling 127% year over year. While about half of total revenue was generated from the hep C dynamic duo of Harvoni and Sovaldi ($12.4 billion to be exact), the company did see enormous growth in other core products, especially its HIV franchise. Stribild sales, for example, more than doubled to $1.2 billion for the full year, compared to the previous year.  

For 2015, management estimates revenue will grow at a respectable 14.3% to about $28.5 billion. Moreover, the steep pricing discounts for its hep C drugs should be offset, at least partially, by higher sales volumes due to greater access to the drugs in the U.S. and Europe. 

So this red-hot biotech won't double its revenue again this year, but it should remain one of the fastest-growing large-cap healthcare companies in the world. Unfortunately, the market is acting like Gilead just lost a top-selling drug to the patent cliff.

Gilead's pipeline should keep the good times rolling
Unlike most large biotechs, Gilead hasn't exactly pursued a "shotgun" approach to drug development. Indeed, its clinical pipeline is demonstrably smaller than those of AbbVie, Pfizer, or J&J.

That said, Gilead has been tremendously successfully at advancing its most promising clinical candidates into late-stage development and eventually into the regulatory review phase, evinced by the recent approvals of Harvoni, Stribild, and Zydelig.

When this company puts its weight behind a certain drug, the chances of success are probably better than average. That's great news for investors.

Right now, Gilead is pushing a pan-genotypic protease inhibitor, GS-9857, in combination with Sovaldi, into clinical development, with the the hope of shortening hepatitis C treatment duration from eight weeks to possibly as low as four weeks. This drug would act as a counterbalance to experimental rivals such as Achillion Pharmaceuticals' ACH-3102 and help the company maintain its market-leading position in the valuable, yet competitive, hep C space. 

Outside of the hep C realm, investors should keep a close eye on Gilead's FXR agonists from the newly acquired Phenex Pharmaceuticals, which are indicated for a host of liver diseases. These experimental compounds are expected to begin midstage testing later this year and could be fertile ground for Gilead's next blockbuster drug. 

Should you buy Gilead right now?
Gilead is a great long-term buy, despite what the moody market is saying at present. There is no immediate competitor to the dominance of Harvoni and Sovaldi in the hep C market, and the company is rapidly working toward another breakthrough drug in this space that could significantly reduce treatment duration. Moreover, management has repeatedly shown a penchant for picking strong experimental candidates, making it highly likely another blockbuster drug will come down the pike soon.

Overall, the market will more than likely come to its senses at some point to properly value Gilead, suggesting now is indeed the time to grab some shares.