Why Is Gilead (GILD) Down 2.4% Since Last Earnings Report?
A month has gone by since the last earnings report for Gilead Sciences (GILD). Shares have lost about 2.4% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Gilead due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Q4 Earnings Miss Estimates, Sales Top on Veklury
Fourth-quarter adjusted earnings of $1.72 per share missed the Zacks Consensus Estimate of $1.76 but increased from $1.67 in the year-ago quarter. The year-over-year increase was due to lower total costs and expenses.
Total revenues of $7.1 billion beat the Zacks Consensus Estimate of $7 billion on better-than-expected Veklury (remdesivir) sales, due to an uptick in hospitalizations at the end of 2023. Revenues decreased 4% due to lower Veklury and HIV sales than the year-ago quarter's level.
Quarter in Detail
Total product sales decreased 4% to $7.1 billion in the quarter under review. Excluding Veklury, product sales were flat year over year at $6.3 billion, as higher oncology sales were partially offset by lower HIV sales.
HIV product sales decreased 2% to $4.7 billion, attributable to a lower average realized price due to channel mix. Sales missed the Zacks Consensus Estimate of $4.9 billion and our model estimate of $4.8 billion.
Biktarvy sales increased 7% year over year to $3.1 billion, due to higher demand. However, the reported number missed both the Zacks Consensus Estimate and our model estimate of $3.2 billion.
Descovy (FTC 200 mg/TAF 25 mg) sales decreased 5% year over year to $509 million, mainly due to unfavorable pricing dynamics in the United States. The figure missed the Zacks Consensus Estimate of $545 million and our model estimate of $565 million.
The Liver Disease portfolio sales, which include chronic HCV, chronic hepatitis B virus and chronic hepatitis delta virus, remained flat year over year at $691 million. Sales were impacted by unfavorable pricing dynamics, offset by higher demand for chronic hepatitis C virus and chronic hepatitis delta virus products.
Cell Therapy product sales increased 11% year over year to $466 million. However, the figure missed the Zacks Consensus Estimate of $526 million and our model estimate of $552.3 million.
Yescarta sales increased 9% year over year to $368 million, primarily driven by solid demand in relapsed or refractory (R/R) large B-cell lymphoma outside the United States.
Tecartus sales increased 19% year over year to $98 million, driven by increased demand in adult R/R B-mantle cell lymphoma and R/R adult acute lymphoblastic leukemia.
Breast cancer drug Trodelvy’s sales surged 53% year over year to $299 million, primarily driven by higher demand in both the United States and Europe. Per the company, with more than 30,000 patients treated to date, Trodelvy's solid demand trends continue to reinforce its robust clinical profile as the only TROP2-directed antibody-drug conjugate approved and available in multiple tumor types. The top line beat the Zacks Consensus Estimate of $297 million and our model estimate of $279.6 million.
Veklury sales decreased 28% to $720 million, primarily driven by lower rates of COVID-19-related hospitalizations. However, sales beat the Zacks Consensus Estimate of $474 million and our model estimate of $435 million.
Adjusted product gross margin declined to 86.1% from 86.8% in the year-ago quarter due to product mix. Research & development expenses were $1.45 billion compared with $1.54 billion in the year-ago quarter.
SG&A expenses amounted to $1.6 billion, down 20.9% year over year. The year-ago quarter recorded a charge related to the termination of the Trodelvy’s collaboration agreement with Everest Medicines in 2022.
2023 Results
Revenues decreased 1% to $27.1 billion due to a reduction of $1.7 billion in Veklury sales, partially offset by higher oncology sales. Revenues were in line with the Zacks Consensus Estimate. Adjusted earnings per share decreased to $6.72 in 2023 from $7.26 in 2022, primarily due to higher total costs and expenses, as well as lower Veklury sales. The reported number also missed the Zacks Consensus Estimate of $6.76.
2024 Guidance
Product sales are projected to be between $27.1 billion and $27.5 billion. Total product sales, excluding Veklury, are expected in the range of $25.8-$26.2 billion.
Total Veklury sales are estimated to be $1.3 billion. Adjusted earnings per share are anticipated in the band of $6.85-$7.25.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -5.7% due to these changes.
VGM Scores
Currently, Gilead has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Gilead has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Gilead belongs to the Zacks Medical - Biomedical and Genetics industry. Another stock from the same industry, GSK (GSK), has gained 1.4% over the past month. More than a month has passed since the company reported results for the quarter ended December 2023.
Glaxo reported revenues of $10 billion in the last reported quarter, representing a year-over-year change of +15.5%. EPS of $0.72 for the same period compares with $0.64 a year ago.
Glaxo is expected to post earnings of $0.91 per share for the current quarter, representing a year-over-year change of +1.1%. Over the last 30 days, the Zacks Consensus Estimate has changed +7.7%.
Glaxo has a Zacks Rank #1 (Strong Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.
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