Gilead Sciences investors were desperately looking for this

Gilead Sciences investors were desperately looking for this


Gilead Sciences saw sales and earnings decline in the past quarter, but increased the previously released outlook for the year 2017. Gilead achieved revenue of $7.14 billion in the second quarter, which was less than $7.78 billion a year earlier.

The decline in sales was partly due to the reduced sales of HIV and Chronic hepatitis B and C products. Sales for these products dropped to $6.4 billion from $7.1 billion in the year-ago quarter. The stock went up after results, though, investors were hoping that the rate of decline in this franchise would at least slow, and that Gilead’s HIV drugs would pick up momentum.

As a result of the sales decline, the biopharmaceutical company’s net profit dropped from $4.18 billion to $3.37 billion. Earnings per share fell from $2.58 to $2.33. EPS, excluding certain items, was $2.29 per share. Analysts were looking for earnings of $2.29 a share with $6.33 billion in revenue.

At the end of March, Gilead had a cash position of $36.6 billion, $2.6 billion more than the end of March 2017.

In 2017, Gilead expects to increase its outlook for the whole of 2017 and now expect revenue to reach between $24.0 and $25.5 billion dollars, where this range was earlier between $22.5 billion and $24.5 billion. HCV drugs are likely to generate revenue somewhere around $8.5 billion to $9.5 billion, up from its prior outlook between $7.5 billion and $9 billion, while non-HCV drug sales are expected in the range of $15.5billion to $16 billion, up from $15 billion to $15.5 billion.

This raised outlook doesn’t guarantee that GILD has eliminated all concerns with its hep C franchise, of course. However, it’s definitely positive development for a stock that has been sorely in need of something good.

Adjusted EPS is now expected to come in between 86 cents and 93 cents, versus the previous guidance of 84-91 cents a share.

“People had a sense they were going to beat on the HCV (hepatitis C) side and that’s where most of it came from,” said Leerink analyst Geoffrey Porges. Still, with a competing drug from AbbVie Inc likely to be approved by regulators next month, the sales trend is unlikely to maintain the current rate, he said.

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She is the Managing Editor for in-depth discussions and analysis as well as breaking news at Markets Morning. She works closely with Editor-in-Chief Zac Berry on content and publishing initiatives for the site. Brianna Clemons has worked as a financial journalist and editor since 1997. She lives in Bucks County, PA, with her husband, four young children and one dog.