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Gilead Beats Street Views; Raises Guidance

Biotechnology company Gilead Sciences, Inc. (NASDAQ: GILD – $70.02) beat Wall Street’s estimates and boosted its 2018 revenue guidance. Gilead reported its third-quarter earnings fell to $2.1 billion from $2.72 billion and on an adjusted basis it earned $1.84 a share. Revenue came in at $5.6 billion versus $6.51 billion. Analysts projected earnings of $ 1.63 on revenue of $5.37 billion. Total product sales for the third quarter were $5.5 billion compared to $6.4 billion for the same period in 2017, as hepatitis drug sales continued to ebb. Sales in the United States were $4.1 billion, $873 million in Europe and $451 million in other locations. As of September 30, Gilead had $30.8 billion of cash and cash equivalents on its books and generated $2.2 billion in operating cash flow. The company repaid $1.8 billion principal amount of senior unsecured notes due in September, paid cash dividends of $742 million and used $449 million on stock repurchases.

       Management raised its full-year revenue outlook to a range of $20.8 billion to $ 21.3 billion versus the previous range of $20 billion to $21 billion. For all of 2018, GLD should earn north of $6.80 per share providing for a price to earnings ratio of 10.3. Gilead has a couple of potentially profitable pipeline products whose favorable test results show promise: Filgotinib, a new rheumatoid arthritis drug being developed with Galapagos and Selonsertib, a medicine used to treat nonalcoholic steatohepatitis. Potential income from these products, however, are years away. Another major acquisition may be needed to generate long-term sales and earnings growth and Gilead has the cash on hand to do it. Dividends have been rising at a generous clip and the current annual rate of $2.28 yields 3.3%. The shares can be held for long-term total return recovery.

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