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Bear of the Day: Gilead Sciences (GILD)

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Gilead Sciences (GILD - Free Report) is aresearch-based biopharmaceutical company that discovers, develops and commercializes innovative medicines in areas of unmet medical need. The company’s portfolio of products and pipeline of investigational drugs includes treatments for HIV/AIDS, hepatitis C virus (HCV), liver diseases, cancer, inflammatory and respiratory diseases, and cardiovascular conditions.

Mixed Q4 Results

Adjusted earnings of $1.44 per share missed the Zacks Consensus Estimate and is down from $1.78 per reported in the year-ago quarter.

Total revenues of $5.79 billion did beat our consensus but declined 2.6% year-over-year.

Gilead’s HCV portfolio continued to weigh heavily on the company, with sales down almost 51% to $738 million. HCV sales also fell 18% from the previous quarter.

A bright spot for Gilead last quarter, however, was the company’s strong performing HIV pipeline. Sales were up almost 21% year-over-year, with Biktarvy generating sales of $578 million during Q4. Gilead’s TAF-based HIV drugs also did well, and sales for Genvoya, Descovy, and Odefsy all saw double-digit growth.

Falling Estimates

Analysts have since turned bearish on Gilead, with nine cutting estimates in the last 60 days for the current fiscal year. Earnings are expected to decline for the year, and the Zacks Consensus Estimate has dropped 22 cents during that same time period from $6.87 to $6.65 per share.

This sentiment has stretched into 2020, though the shifting tide hasn’t been as dramatic. Our consensus estimate has dropped five cents in the past two months.

GILD is now a Zacks Rank #5 (Strong Sell).

Shares of the biotech have only returned about 6.3% since January. In comparison, the S&P 500 is up almost 14% year-to-date.

Looking Ahead

Gilead’s revenue outlook for full-year 2019 hit the biotech hard, and this lowered guidance indicates that this year may not generate the kind of growth investors have been hoping for. Additionally, generic versions of its cardiovascular drugs Letairis and Ranexa are set to enter the U.S. market, which could negatively effect Gilead’s results this year.

But, the company has a huge cash stockpile of $31.5 billion, and new CEO stepping in on May 1, Daniel O’Day. He’s coming from Roche Pharmaceuticals, and it will be interesting to see how he leads Gilead on its oncology-focused journey.

If you’re an investor interested in adding a biotech stock to your portfolio, consider Celgene Corp. . Shares of Zacks Rank #1 (Strong Buy) CELG, which is a company that develops treatments for cancer and immune-inflammatory diseases, has gained about 42% since January.

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