Gilead Sciences (GILD) has had a difficult year to say the least. The share price is down 29% from its 52-week high.

Gilead was once a market darling and a premier growth stock. At the beginning of 2013, Gilead was a $37 stock. Two years later, it was a $95 stock.

The stock has crashed back to $76 since then. Investors are questioning the growth prospects for the business. There are concerns in light of heightened competition facing Gilead’s core hepatitis therapies, and more intense regulatory scrutiny over drug pricing.

But that doesn’t mean Gilead is a lost cause.

If anything, investors have an opportunity to buy in at a much more favorable price. The company is not turning the ship quickly enough to appease the market, but long-term investors should stay the course.

Business Overview

Gilead is a giant in the biotechnology field. It manufactures pharmaceutical products to treat two major therapeutic areas:

• HCV (45% of sales)
• HIV (47% of sales)
• Other Products (8% of sales)

The company’s blockbusters are its core Hepatitis drugs Harvoni and Sovaldi.

Geographically, Gilead’s results are fairly concentrated. The U.S. accounts for a solid majority of Gilead’s total sales, although the company is working to boost its international presence moving forward.

Source: Third Quarter Earnings, page 18

Gilead’s stock price has performed so poorly over the past year, because investors doubt its growth potential. There is a high level of concern because of the deterioration of the HCV business.

Source: Third Quarter Earnings, page 19

Gilead is facing intense competition in the HCV space. This is due to the high margins in this therapeutic areas. As a result, sales of Harvoni and Sovaldi each declined 44% last quarter.

Fortunately, Gilead’s HIV sales increased 20% last quarter.

Despite its uneven financial performance, Gilead as a whole generates a huge amount of free cash flow. Last year, Gilead generated $19.5 billion of free cash flow.

Such a large amount of cash flow allows the company to create value for shareholders in a variety of ways.

Growth Prospects

Going forward, Gilead can return to earnings-per-share growth. It can accomplish this first by investing in its pipeline.

Innovation is critical for any biotechnology company. This is where Gilead retains a key advantage. The company is in a fortunate position. It generates so much cash that it can afford to allocate significant resources toward research and development.

Gilead’s R&D spending increased 35% through the first three quarters of this year. This will greatly help Gilead to replenish its product pipeline.

Gilead ended 2015 with 180 active clinical studies, of which 61 were Phase 3 clinical trials.

This investment is starting to bear fruit, within Gilead’s HIV portfolio. Gilead’s HIV segment produced 18% sales growth over the first three quarters of 2016.

Source: Third Quarter Earnings, page 20

Last quarter, Gilead’s HIV business surpassed the HCV business in terms of revenue.

Moreover, Gilead’s Other Products category, which includes products in hematology, oncology, cardiovascular, and inflammation, generated 12% sales growth over the first three quarters of the year.

Gilead’s tremendous free cash flow also allows the company to pursue a significant acquisition. Gilead ended last quarter with $31.6 billion of cash and short-term marketable securities on its balance sheet.

Developing drugs internally can be a costly and time-consuming process. Therefore, Gilead could put some of its massive cash hoard to work to simply buy growth in the form of M&A.

Finally, another measure Gilead can employ to grow earnings-per-share is repurchasing its own shares. Last year, Gilead utilized $10 billion to repurchase its own shares.

With fewer shares outstanding, Gilead grows future earnings-per-share. Once shares are repurchased, each remaining share receives a higher portion of a company’s earnings.

Expected Future Returns

There is an old saying, which is that the stock market hates uncertainty. Gilead stock is perhaps the poster boy for that idea.

Gilead stock trades for a price-to-earnings ratio of just 7. It is much cheaper than the S&P 500, which trades for an average price-to-earnings ratio of 25.

Because Gilead stock is so cheap, it could provide high future returns to shareholders. For example, since 2000 the stock traded for an average price-to-earnings ratio of 11.5.

If Gilead stock simply returned to its average price-to-earnings ratio, it would represent a 64% return. It is not unreasonable for Gilead to trade back to its average valuation. As the company progresses through its turnaround, the market may become more comfortable with its growth trajectory.

There is a good chance Gilead can grow future earnings, due to its robust pipeline and continued growth in therapeutic areas outside the HCV franchise.

Investors may need to be patient. Gilead is a huge company—it has a $100 billion market cap.

As such, it is not easy for a company as large as Gilead to engineer a turnaround quickly. Analysts expect Gilead’s earnings-per-share to decline another 9% in 2016.

However, analysts project Gilead to return to earnings-per-share growth in 2017.

A combination of an expanding price-to-earnings ratio, earnings-per-share growth, and Gilead’s 2.5% dividend could reasonably generate double-digit annualized returns moving forward.

Final Thoughts

Gilead stock has declined significantly over the past year. Investors are right to question the company’s growth strategy.

While the share price decline may be discouraging for short-term traders, long-term investors should recognize the company’s strategic growth plan.

Through R&D, acquisitions, and share repurchases, Gilead has an excellent chance at returning to earnings-per-share growth next year and beyond.

Value and income investors have a lot of reason to consider Gilead. Investors should view the share price decline as a potential buying opportunity. As Warren Buffett says:

“Long ago, Ben Graham taught me that ‘Price is what you pay; value is what you get.’ Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down.”

There’s no doubt Gilead stock is ‘marked down’.And, Gilead is attractive for dividend growth investors as well. The stock offers a 2.5% current dividend yield and in 2016 increased its dividend by 9%.