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Gilead Profits Fall; Beats Earnings and Revenue Estimates

Bio-pharmaceutical firm Gilead Sciences, Inc. (NASDAQ: GILD – $75.38) said total revenues for the second quarter were $7.1 billion compared to $7.8 billion in 2016. Adjusted net income, which excludes amounts related to acquisition-related and other expenses, was $3.4 billion or $2.56 per share compared to $4.2 billion or $3.08 per share in 2016. Analysts were expecting GILD to earn $2.15 per share for the period. Quarterly sales of hepatitis C drugs Sovaldi, Harvoni and Epclusa totaled $2.9 billion, down from $4 billion a year earlier. Analysts had forecast $2.23 billion. Gilead warned earlier this year that sales of its high-priced hepatitis C drugs were declining as fewer patients were deemed eligible for treatment and competition grew. Second-quarter sales of other antiviral products, including Gilead’s main franchise of HIV drugs, rose to $3.6 billion from $3.1 billion for the same period in 2016. The company raised its full-year 2017 product sales estimate to between $24 billion and $25.5 billion, up from a previous range of $22.5 billion to $24.5 billion.

       Gilead is thought to be seeking a large acquisition. Many rumors are flying, but Incyte and Kite Pharma have been named as possible targets. Gilead is probably looking for companies in the oncology and immunology spaces and funding large deals would not be a problem for the company. Absent an acquisition, its doubtful this stock will outperform the short-term market averages. However, I believe the company will succeed in acquiring the right company at the right price and, thus, I will hold for long-term recovery. Meanwhile, the stock yields 2.8%, enhancing its total return potential.

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