Categories Analysis, Health Care

Earnings preview: HIV to drive topline growth for Gilead Sciences in Q4

Biotechnology company Gilead Sciences (GILD) is scheduled to report fourth-quarter earnings results after the closing bell on Monday, February 4. The company is expected to post a 2% decline in earnings to $1.74 per share on revenues of $5.52 billion. The topline projection represents a 7% fall from the same quarter last year.

Gilead stock has plunged 16% in the trailing 52 weeks, while the S&P 500 index has fallen 4.1%. Gilead’s shares were hurt last year by the increasing competition in the hepatitis C virus (HCV segment) sales as well as CEO John F. Milligan’s decision to step down.

 

Photo by Drew Hays on Unsplash

Milligan, who was one of the earliest recruits of Gilead, has played an instrumental role in the company’s acquisition activities as well as licensing collaborations with peer firms. He will be replaced by Daniel O’Day on March 1.

On the product side, even though Harvoni has received regulatory approval in China, the weakness in HCV sales is likely to continue into the fourth quarter, primarily due to lower patient starts.

Meanwhile, the HIV segment continues to be a strong performer, thanks to strong demand for Odefsey, Descovy and Genvoya. Gilead is, in fact, ramping up its R&D activity in this segment to mark its own territory in HIV treatment.

The cardiopulmonary franchise is also looking solid ahead of the fourth-quarter results, despite Letairis losing its exclusivity in June last year. The management expects the franchise to produce consistent sales in the fourth quarter also.

Transcript: Gilead Q3 2017 earnings conference call full transcript

During the earnings conference call, look out for comments on the company’s recent foray into the non-alcoholic steatohepatitis (NASH) segment through a licensing deal with South Korean firm Yuhan Corporation. The management’s expectations in this regard, as well as its pipeline plans, would set the tone for the stock in 2019.

Eight out of 10 analysts covering the stock have recommended a Buy rating. Two analysts recommend Hold. The stock has a 12-month average price target of $91.50, representing a 30% upside from its Thursday’s close.

 

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