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Gilead (GILD) to Report Q2 Earnings: What's in the Cards?

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Biotech major Gilead Sciences Inc. (GILD - Free Report) is slated to report second-quarter 2021 results on Jul 29, after market close.

The company has a mixed track record, with earnings missing estimates in one of the last four quarters and beating in the remaining three, the average negative surprise being 1.46%. In the last reported quarter, the company beat expectations by 0.97%.

Gilead Sciences, Inc. Price, Consensus and EPS Surprise

 

Gilead Sciences, Inc. Price, Consensus and EPS Surprise

Gilead Sciences, Inc. price-consensus-eps-surprise-chart | Gilead Sciences, Inc. Quote

Let’s see how things have shaped up for this announcement.

Factors at Play

Gilead did not provide any guidance for the second quarter. A decline in HIV franchise sales due to the loss of exclusivity of Truvada and Atripla adversely impacted the top line in the first quarter. The trend has most likely continued in the second quarter as well. Nevertheless, growth in Biktarvy sales might have somewhat offset the overall decline in sales in the quarter under review.

Descovy sales too declined in the previous quarter and a similar trend has most likely prevailed in the to-be-reported quarter.

On the first-quarter call, management stated that the COVID-19 pandemic is expected to continue to impact its business and broader market dynamics, such as HCV treatment initiations and HIV new starts and switches.  On a positive note, the company had expected a more gradual recovery in the COVID-related dynamics starting the second quarter of 2021. The Zacks Consensus Estimate for sales of Biktarvy and Descovy is projected at $2.1 billion and $456 million, respectively.

HCV sales are likely to have declined in the quarter under review, a trend continuing for many quarters due to lower sales volume stemming from lower patient starts in the United States and Europe as a result of the ongoing pandemic. Sales in the previous quarter were down 30% to $510 million.

Veklury sales contributed $1.5 billion to the top line in the previous quarter. Sales have most likely increased in the to-be-reported quarter, driven by higher hospitalization and treatment rates due to the COVID-19 surge in countries like India. The Zacks Consensus Estimate for Veklury sales is projected at $723 million.

Cell Therapy product sales, which include Yescarta (axicabtagene ciloleucel) and Tecartus (brexucabtagene autoleucel), came in at $191 million in the previous quarter. Sales might have experienced a sequential increase, driven by a higher number of therapies provided to patients and its continued expansion in Europe as lockdown restrictions eased. The Zacks Consensus Estimate for Yescarta sales is projected at $178 million.

Trodelvy (for breast cancer) sales came in $72 million in the previous quarter. The drug was added following the acquisition of Immunomedics by Gilead in 2020.  The FDA had earlier granted accelerated approval to Trodelvy for use in adult patients with locally advanced or metastatic urothelial cancer (UC) who have previously received platinum-containing chemotherapy and either a programmed death receptor-1 (PD-1) or a programmed death-ligand 1 (PD-L1) inhibitor.  Sales might have registered a sequential increase as demand is normalizing. 

Operating expenses have also most likely increased due to higher investments in the oncology program.

Other Pipeline & Regulatory Updates

Apart from the regular top and bottom-line numbers, we expect investors to focus on key pipeline updates.

In June 2021, Gilead submitted a New Drug Application (NDA) to the FDA seeking approval of lenacapavir, an investigational, long-acting HIV-1 capsid inhibitor, for the treatment of HIV-1 infection in heavily treatment-experienced (HTE) people with multi-drug resistant (MDR) HIV-1 infection.

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for Gilead this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. Unfortunately, that is not the case here, as you will see below. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.

Earnings ESP: Earnings ESP for Gilead is -2.39% as the Zacks Consensus Estimate is pegged at $1.76, while the Most Accurate Estimate is pegged at $1.72.

Zacks Rank: It currently carries a Zacks Rank #3.

Share Price Performance

Gilead’s stock has gained 18% in the year so far compared with the industry's growth of 0.1%.

 

Zacks Investment Research
Image Source: Zacks Investment Research

Stocks to Consider

Here are some drug/biotech stocks you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season.

Ironwood Pharmaceuticals (IRWD - Free Report) has an Earnings ESP of +11.11% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Pfizer (PFE - Free Report) has an Earnings ESP of +2.33% and a Zacks Rank #3.

AbbVie, Inc. (ABBV - Free Report) has an Earnings ESP of +0.86% and a Zacks Rank #3.