Gilead Sciences earnings preview: What to expect in Q1

Gilead Sciences (NASDAQ: GILD) has tested its investors enough lately. The stock has increased just 2.5% in the year-to-date period, while its peer companies have achieved double-digit growths. The broader industry has, meanwhile, achieved a growth of about 17% during the same period.

Every time the stock appears set for a bull rally, some negative news tends to pull it back down.  The biotechnology firm is now scheduled to report first-quarter 2019 earnings results on May 2, Thursday, after the regular trading hours, and investors are hoping this would give the stock enough thrust to achieve an upward trajectory.

Analysts have projected a 3.6% growth in Q1 revenues to $5.27 billion. EPS is expected to be $1.64.

There is some positivity surrounding the stock ahead of the earnings, thanks to a bullish note from Bernstein analyst Aaron Gal last week. He initiated the stock coverage with an Outperform rating, expressing confidence in its HIV unit. He added that Gilead’s HIV drug Biktarvy has the potential to increase its market share to 20% in the near term from the current 10%.

READ: THE QUESTION EVERY POT INVESTOR ASKS HIMSELF – AURORA CANNABIS OR HEXO?

Separately, development of the company’s rheumatoid arthritis drug Filgotinib, which is currently undergoing Phase 3 trials, has been going pretty steadily. If it manages to clear the trials and regulatory approvals, it would pit Gilead directly against bigger rivals Pfizer (NYSE: PFE) and Eli Lilly (NYSE: LLY) in this space.

Investors are also pinning their hopes on Gilead’s CAR-T cancer treatment, though revenues have been disappointing so far.

A major let-down happened in February when the California-based firm failed to meet the primary endpoint of its most advanced NASH (nonalcoholic steatohepatitis) candidate, selonsertib, in a Phase 3 trial. There are other investigational NASH drugs in Gilead’s pipeline, but these will take time to reach the market, in case they come out of the trials successfully.

READ: WHAT IS NASH AND WHICH BIOTECH FIRMS ARE VYING FOR THE FIRST-MOVER STATUS

On the whole, Gilead appears to be a package that holds a punch, but how long it would take for the punch to materialize is left to wild guesses.

The stock has a 12-month average price target of $81.5, suggesting a 25% upside from the last close.

Listen to on-demand earnings calls and hear how management responds to analysts’ questions