Biopharmaceutical firm Gilead Sciences (NASDAQ: GILD – $66.81) reported total revenue of $6.5 billion in the first quarter compared to $7.8 billion last year, but in line with consensus. Adjusted income was $2.9 billion or $2.23 per share, compared to $4.3 billion or $3.03 per share in 2016 and five cents lower than Street estimates. Antiviral product sales, which include sales of HIV, chronic hepatitis B and hepatitis C products, were $5.8 billion vs. $7.2 billion for the same period in 2016. Other product sales, such as Letairis, Ranexa and AmBisome, were $536 million, compared to $498 million for the same period in 2016. As of March 31, Gilead had $34.0 billion of cash, cash equivalents and marketable securities on hand compared to $32.4 billion as of December 31, 2016. Cash flow was $2.9 billion for the quarter, of which the company utilized $565 million on stock repurchases and paid cash dividends of $687 million.
Investors were disappointed in the earning’s miss and the company failed to provide assurances of any acquisitions that can drive revenue higher, as hepatitis drug sales decline from pricing pressures and competition. An acquisition of any kind would probably raise the price of this stock. The dividend should continue to be raised, giving investors a decent income stream with a 3% yield. The low valuation of 8 times 2017 expected earnings, provides some relief to investors and the share price did not breach its 52-week low on the news. Long-term holdings for eventual recovery are still warranted.