Is Gilead Sciences, Inc. overvalued or undervalued?

As of 7 July 2025, the valuation grade for Gilead Sciences, Inc. has moved from expensive to very expensive, indicating a significant concern regarding its current pricing relative to its fundamentals. The company appears overvalued, particularly given its P/E ratio of 15, which is lower than the peer average of approximately 15.53 for companies like Amgen, Inc. with a P/E of 19.10. Additionally, Gilead's EV to EBITDA stands at 11.39, while its peer average is 13.08, further highlighting the disparity in valuation metrics.
In terms of profitability, Gilead boasts a robust ROE of 49.06% and a PEG ratio of 0.81, suggesting that while the company is generating strong returns, its growth may not justify its high valuation. The recent stock performance shows that Gilead's returns have outpaced the S&P 500 year-to-date and over one year, with a YTD return of 23.01% compared to 12.22% for the index, but its longer-term performance has lagged significantly over five and ten years. This mixed performance, combined with the high valuation ratios, reinforces the conclusion that Gilead Sciences, Inc. is currently overvalued.