Gilead Sciences (GILD Quick QuoteGILD - Free Report) has been in a steady downtrend for nearly two years since it peaked above $120 in June of 2015.

The main reason is that the company's explosive sales growth from its Hepatitis-C drugs Sovaldi and Harvoni peaked amid political pressure to lower prices. Little else has come from the company's R&D pipeline to make up for lost sales.

And estimates keep falling, keeping the stock yet again in the cellar of the Zacks Rank. Personally and professionally, I believe that Gilead is an excellent company and will remain a major force in BioPharma. A buying opportunity could come sometime this year.

But the steady decline in both revenues and profits these past 18 months have predicted the fall in the stock to under $70, one of the worst big cap performers in the S&P 500 and Nasdaq 100.

And until those estimates turn back upwards, it is still time to be cautious and deploy capital elsewhere. Just think about all the investors who bought the slowly falling knife all the way down from $100, then $90, then $80 believing it would soon turn around.

The Revenue Picture

Let's talk about the top line first, and then I'll update the current EPS outlook. I'll also describe some rays of hope that some Gilead investors are waiting on.

Gilead revenues peaked at nearly $33 billion in early 2016. The current 12-month trailing sales haul (as of the December quarter) is $30.4 billion.

And top line estimates for the current year are for $24.5 billion, a drop of 19.3% vs 2016.

It doesn't get any better looking out to next year. The 2018 sales consensus is for only $22.65 billion, representing another decline of 7.65%.

The Earnings Picture

In the past 60 days, the full-year EPS consensus for GILD has dropped from $10.46 to just $8. That represents negative 29.6% "growth."

The 2018 profit projection has fallen from $10.35 to $7.62 for a -4.7% retreat.

So the question on every GILD investor's mind is "What will it take to turn this slide around?"

The answer may well be what catapulted Gilead sales from $9 billion in 2012 to that peak above $32 billion in 2016: a major acquisition.

In 2011, GILD paid $11 billion for Pharmasset to acquire the drug assets which became key to its blockbuster Hep-C franchise.

And some investors are pounding the table on this strategy right now.

Barclays Pens an Open Letter to Gilead

In early March, investment bank Barclays analyst Geoff Meacham wrote a letter to Gilead management about his frustration with the company's stagnation.

He recently provided an update following significant investor feedback. A majority of investors agreed on the need for a transformational M&A deal, which could be a catalyst for renewed growth.

"The majority of investors agreed with the need for a larger, more transformational deal, which could be multiple-expanding and pipeline accretive. Importantly, this could provide a real catalyst to put GILD shares back on a growth trajectory that could be more broadly appealing to investors; we suspect this is fully appreciated by the management team and board.

"A minority of investors were focused on capital deployment through buybacks and dividend growth driven by a healthy underlying HIV franchise. These investors were genuinely concerned about a large, dilutive deal. While a middle ground could be a material step up in biz dev/licensing activity, this could be a time-consuming process where a critical mass of deals could take 12+ months to be fully executed.

"Overall, we definitely get the impression that valuation is unsatisfactory to Gilead and that there is more urgency towards a deal than even six months ago. That said, it isn't clear to us if there is a willingness to deviate from the company's typical deal parameters or go into new therapeutic categories."

(end of Meacham notes)

This is certainly encouraging for Gilead investors. But it's all still speculation and hope right now, not a strategy from the company itself.

Until an M&A cannon is fired, just keep your eye on the Zacks Rank. It will let you know when a true turnaround is afoot.

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