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Will Strong HIV Sales Drive Gilead's (GILD) Q3 Earnings?

Zacks Equity Research

Biotech major Gilead Sciences Inc. GILD is slated to report third-quarter 2019 results on Oct 24, after market close.

Gilead has a pretty decent track record, with earnings beating estimates in three of the last four quarters, the average being 2.20%. In the last reported quarter, the company’s earnings beat expectations by 4.60%.

Gilead’s stock has gained 4.3% in the year so far, against the industry's decline of 5.1%.

 

Why a Likely Positive Surprise?

Our proven model predicts an earnings beat for Gilead this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.

Earnings ESP: Earnings ESP for Gilead is +0.91% as the Zacks Consensus Estimate is pegged at $1.76, while the Most Accurate Estimate is pegged at $1.77.

Zacks Rank: It currently carries a Zacks Rank #3.

Factors Likely to Impact Q3

Gilead did not provide any quarterly guidance. Strong HIV sales drove the second-quarter results, a trend most likely to continue in the third quarter.

The HIV franchise’s performance and other antiviral product sales in the third quarter might have been driven by the continued uptake of tenofovir alafenamide-based products — Genvoya, Descovy and Odefsey. Biktarvy’s uptake has been phenomenal so far in the year and its sales are likely to have boosted the top line in the third quarter. The Zacks Consensus Estimate for sales of Genvoya and Descovy is projected at $958 million and $386 million, respectively.

HCV sales are likely to have declined in the third quarter due to competitive pressure.

Yescarta (axicabtagene ciloleucel) generated $120 million in sales during the second quarter of 2019 and third-quarter sales might have experienced a sequential increase.  Apart from the regular top and bottom-line numbers, we expect investors to focus on the company’s pipeline updates.

Earlier this month, the FDA approved a label expansion of the HIV treatment, Descovy, as a prevention option. The agency approved the treatment for a pre-exposure prophylaxis (PrEP) indication. Descovy for PrEP is indicated to reduce the risk of sexually acquired HIV-1 infection in adults and adolescents weighing at least 35 kg, who are HIV-negative and at risk for sexually acquired HIV, excluding individuals at risk from receptive vaginal sex.

In August, Gilead and partner Galapagos’ GLPG Marketing Authorization Application (MAA) for filgotinib, an investigational, oral, selective JAK1 inhibitor, for the treatment of adults with rheumatoid arthritis was validated by the European Medicines Agency. Management is expected to throw more light on its plans for a regulatory submission in the United States.

Other Stocks to Consider

Here are some stocks you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter.

Alexion Pharmaceuticals, Inc. ALXN has an Earnings ESP of +1.80% and a Zacks Rank #2. The company is scheduled to release results on Oct 23. You can see the complete list of today’s Zacks #1 Rank stocks here.

Merck & Co., Inc. MRK has an Earnings ESP of +0.16% and a Zacks Rank #3. The company is scheduled to release results on Oct 29.

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