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Gilead Sciences, Inc. (GILD) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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Gilead Sciences, Inc. (GILD)

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Intrinsic Value (DCF)

Current$121.26
→
Intrinsic$147.52
+22%
$94.77$147.52$252.52
Market implies 4% growth for 5 years
GILD shows 22% potential upside using 8% growth — reasonable if fundamentals hold.
At $121, the market prices in only 4% growth — below historical 8%, suggesting low expectations.
Range: Bear $95 → Bull $253. Current price implies expectations below the base case, but well above the bear case.
Discount ↓Growth →4%6%8%10%
8%$183$201$221$242
10%$123$135$148$161
12%$90$99$109$119
14%$71$78$85$93

Bull Case

  • Bull case ($253) offers 108% upside at 10% growth, 8% discount
  • 18% margin of safety vs. base case estimate
  • Market-implied growth (4%) ≤ historical CAGR (8%)

Bear Case

  • Bear case ($95) implies 22% downside at 6% growth, 12% discount
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5-Year Free Cash Flow Projection

Year 1$11.13B
Year 2$12.02B
Year 3$12.98B
Year 4$14.02B
Year 5$15.14B
Terminal$239.93B

📐 Model Inputs

Growth Rate8.0%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate9.5%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$10.30BTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.

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Frequently Asked Questions

Is GILD stock undervalued or overvalued?
🟢 UNDERVALUED

GILD trades at $121.26 vs. our DCF-derived intrinsic value of $147.52, implying +22% upside. At a 9.5% WACC and 8.0% projected FCF growth, the market appears to be underpricing the present value of GILD's future cash flows. The bear case ($101.16) still suggests upside, providing margin of safety.

What is GILD's intrinsic value?

Using a 5-year DCF model: Base FCF of $10.30B, projected at 8.0% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 9.5% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $16.72B net debt and dividing by 1.25B shares: Bear $101.16 | Base $147.52 | Bull $211.65. Current price $121.26 implies +22% to base case.

How is GILD's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 8.0% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=9.5%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($201.86B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 19.6x.