Gilead Sciences, Inc. (NASDAQ: GILD – $67.09) reported a second-quarter profit of $1.9 billion, on sales of $5.69 billion, an increase from $5.65 billion a year ago. After adjusting for extraordinary items, the bio-tech company’s per share earnings was $1.82, down from $1.91 a year ago. Analysts, however, expected adjusted earnings of $1.72 a share on sales of $5.53 billion. Despite declining overall sales, Gilead’s HIV medicines continue to be a strong base for the company. Gilead reported HIV product sales of $4 billion, up from $3.7 billion a year ago driven by demand for its new treatment Biktarvy as sales surged to $1.12 billion from $185 million a year earlier. Hepatitis C drug sales continued to decline, though less than in the previous quarter, falling to $842 million from $1 billion a year ago. Gilead has been mostly focusing on partnerships instead of outright acquisitions since its massive purchase of Kite Pharma two years ago. The company earlier this month announced a $5.1 billion investment in Belgo-Dutch biotech Galapagos NV, deepening its partnership and pushing further into fibrosis and arthritis treatments.
Looking ahead, the Foster City, California-based company said it now expects sales of $21.6 billion to $22.1 billion in 2019, compared with its prior forecast of $21.3 billion to $21.8 billion. Street estimates have been closer to a $21.25 billion figure. Following the upbeat earnings report and guidance, the company is likely to earn upwards of $6.90 per share this year, valuing the stock at a very reasonable 9.7 times estimates. Also, today’s declared quarterly dividend remained unchanged at $0.63 per share, yielding 3.7% on an annualized basis. Not without political and competitive risks, I am continuing to hold on to Gilead for its long-term recovery potential and generous payout.