A potential ‘home run’ trade is emerging in this pharma stock
I recently laid out a bullish thesis for Gilead Sciences (GILD) , and that trade just expired on Friday with a 144% gain. The bullish debit vertical spread successfully captured the upside to a new 52-week high as sentiment improved around Gilead’s strengthening HIV franchise and expanding oncology portfolio. I’m looking to roll our profits into a new bullish position to capitalize on this momentum and position for what could evolve into a “home run” trade if the bullish trend persists for GILD. Trade timing & outlook Breakout confirmation: The breakout above the major $120 resistance signals the start of a new bullish trend. Momentum: GILD is now consolidating above prior resistance, setting the stage for an extended rally toward our $150 target. Relative strength: GILD continues to outperform both its peers and the overall S & P 500. Fundamentals Gilead remains one of the most compelling valuations within the large-cap biopharmaceuticals. Combining industry leading net margins, free cash flow generation and growth, GILD looks inexpensive compared to its peers at only 14x forward earnings. Forward PE Ratio: 14x vs. Industry 14x Expected EPS Growth: 24% vs. 8% Expected Revenue Growth: 3% vs. 3% Net Margins: 22% vs. 16% Bullish thesis Upgraded 2025 guidance: Gilead delivered a cleaner Q2 quarter, lifting full-year revenue guidance to $28.3B–$28.7B . Growth engines beyond HIV: CymaBay acquisition adds Livdelzi as a new, high-margin liver-disease therapy with U.S. approval and international expansion potential. Oncology growth: Trodelvy sales rose 14% YoY, and Gilead is broadening its oncology strategy with a $750M licensing deal with Kymera. Margin resilience: Gross margins improved to 86.9% (non-GAAP), supported by mix shift toward higher-quality assets and operating expense discipline. Options strategy With an IV Rank of 47%, options prices are moderately elevated, making debit vertical spreads an efficient way to capture upside exposure. I’m buying the Dec 19, 2025 $125/$140 Call Vertical @ $4.18 Debit. This entails: Buying the Dec 19, 2025 $125 call @ $5.55 Selling the Dec 19, 2025 $140 call @ $1.37 The maximum reward is $1,082 per contract if GILD is above $140 at expiration. The maximum risk is $418 per contract, if GILD is below $125 at expiration. The breakeven point for this trade is $129.18. View this Trade with Updated Prices at OptionsPlay Summary Gilead’s leadership in HIV, emerging PrEP and liver-disease franchises and ongoing oncology momentum suggests a sustainable multi-year growth. The recent technical breakout validates this bullish sentiment, and the defined-risk vertical spread captures leveraged exposure to the next leg higher. DISCLOSURES: None. All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
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