Gilead has the following downside targets:
-
$89.37
-
$65.25
-
$53.19
-
$41.12
Already the stock has achieved the conservative downside target of $89.37. In addition, GILD has managed to fall to the mid-range target of $65.25. At this point, investors need to build in their expectations for a decline from between $65.25 and $61.83.
For a sense of perspective, the last peak in GILD from 2008 brought the stock down to the mid-range target of $12.61.
By falling below the current mid-range downside target, we believe that GILD is undervalued and could be purchased on any additional downside moves. According to Charles H. Dow, co-founder of the Wall Street Journal, “it is always wise to buy only a portion of the amount wanted so as to be able to buy more if the price declines further. (Dow, Charles H. Review & Outlook. Wall Street Journal. September 22, 190o).” If there is consideration of the purchase of GILD, be prepared to buy in stages in a similar manner described by Charles H. Dow.