Back to top

Analyst Blog

Gilead Sciences, Inc. ‘s (GILD - Analyst Report) first quarter 2013 earnings (excluding special items but including stock option expense) of 45 cents per share missed the Zacks Consensus Estimate of 47 cents per share.  Lower-than-expected revenues were responsible for the earnings miss during the first quarter of 2013. The company’s first quarter 2013 adjusted earnings beat the year-ago earnings of 30 cents.

Revenues climbed 11% to $2.53 billion but missed the Zacks Consensus Estimate of $2.56 billion. The year-over-year increase in total revenue was attributable to higher product sales. Foreign exchange (Fx) fluctuations adversely impacted product sales by $7.3 million.

The First Quarter in Details

Product sales climbed 8.1% to $2.39 billion, driven by anti-viral products, such as Viread (up 10% to $210.3 million) and Complera/Eviplera launched in 2011 (up 184% to $148.2 million). Stribild – an HIV combination pill – launched in the US in Aug 2012, contributed $92.1 million to total revenue in the first quarter of 2013, up 130.3% sequentially. However, HIV drugs, such as Truvada (down 8%) and Atripla (down 1%), performed disappointingly in the first quarter of 2013.

Antiviral product sales for the quarter grew 7% to $2.06 billion. The US market contributed $1.16 billion (up 7%) to antiviral product sales, while Europe contributed $750.4 million (up 8%). Other products including Letairis, Ranexa and AmBisome recorded sales of $118.1 million (up 35.3%), $96.3 million (up 15.7%) and $85.3 million (up 0.6%) respectively. Gilead’s royalty, contract and other revenues climbed 86.4% to $138.1 million.

On the operational front (excluding special items but including stock option expense), operating margin climbed to 42.1% from 36.7% a year ago. Research & development (R&D) expenses climbed 8.2% to $486.9 million in the first quarter of 2013 while selling, general and administrative (SG&A) expenses declined 14.8% to $363.5 million. The rise in R&D expenses was primarily driven by Gilead’s efforts to develop its pipeline. Interest expenses declined during the first quarter of 2013 due to the repayment of bank debt pertaining to Gilead’s acquisition of Pharmasset Inc. in 2012.

2013 Projection Backed

Gilead maintained its guidance for 2013, which was originally issued in Feb 2013 while releasing its fourth quarter 2012 results. The company still expects product revenue in the range of $10–$10.2 billion, reflecting an increase of 6%–9% over 2012 levels.

Adjusted product gross margin for 2013 is still projected in the range of 74%–76%. Adjusted R&D expenses continue to be projected in the range of $1.8–$1.9 billion. SG&A expenses are still forecast in the range of $1.55–$1.65 billion.

Gilead carries a Zacks Rank #3 (Hold). The companies that look better-positioned include Osiris Therapeutics (OSIR), Athersys, Inc. (ATHX - Snapshot Report) and Cleveland BioLabs, Inc. (CBLI). All three are Zacks Rank #1 (Strong Buy) stocks.

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
RPC INC RES 24.91 +8.35%
LITHIA MOTO… LAD 94.59 +4.60%
DELTA AIR L… DAL 39.15 +3.90%
FLAMEL TECH… FLML 14.51 +3.50%
SOUTHWEST A… LUV 28.87 +2.92%