A month has gone by since the last earnings report for Gilead Sciences (GILD Quick QuoteGILD - Free Report) . Shares have added about 1.9% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Gilead due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Q2 Earnings & Sales Top, Revenue Outlook Upped

Gilead reported earnings of $1.58 per share in the quarter, which beat the Zacks Consensus Estimate of $1.51 but were down from $1.81 in the year-ago quarter.

The year-over-year decline was primarily due to upfront payment for Dragonfly collaboration and Biktarvy [bictegravir 50mg/emtricitabine 200mg (FTC)/tenofovir alafenamide 25mg (TAF)]-related royalty expense that began in the first quarter of 2022.

Total revenues of $6.3 billion surpassed the Zacks Consensus Estimate of $5.9 billion and increased 1% from the year-ago quarter due to higher sales of HIV and oncology products, offset partially by decreased sales of Veklury and hepatitis C virus (HCV) products.

Quarter in Detail

Total product sales were flat at $6.1 billion in the quarter under review. Excluding Veklury, product sales increased 7% year over year to $5.7 billion due to growth in the HIV, Cell Therapy and Trodelvy (sacituzumab govitecan-hziy) businesses.

HIV product sales increased 7% to $4.2 billion, driven by growth in demand for flagship HIV therapy Biktarvy and changes in channel mix leading to higher average realized price.

Biktarvy sales increased 28% year over year to $2.5 billion due to higher demand and channel mix. Descovy (FTC 200mg/TAF 25mg) sales increased 6% to $460 million, driven by channel mix and increased demand.  The Zacks Consensus Estimate for sales of Biktarvy and Descovy were $2.3 billion and $444 million, respectively.

However, HCV product sales decreased 18% to $448 million, affected by channel mix, leading to lower average realized price and fewer patient starts.
Hepatitis B virus (HBV) and hepatitis delta virus (HDV) product sales decreased 1% to $234 million. Vemlidy (TAF 25mg) sales decreased 3%, primarily due to China Volume Based Procurement update.

Cell Therapy product sales increased 68% to $368 million. Yescarta sales increased 66% to $295 million, driven by demand for relapsed or refractory (R/R) large B-cell lymphoma (LBCL) and strong uptake in R/R indolent follicular lymphoma in the United States. Tecartus sales totaled $73 million, driven by demand for R/R mantle cell lymphoma (MCL) in the United States and Europe and for adult patients with R/R B-cell precursor acute lymphoblastic leukemia (ALL) in the United States.

Breast cancer drug Trodelvy’s sales increased 79% to $159 million, reflecting uptake in both the second- and third-line settings for the treatment of metastatic triple-negative breast cancer (TNBC) in the United States and Europe as well as for metastatic urothelial cancer in the United States.

Veklury sales decreased 46% to $445 million due to lower demand as hospitalization rates declined in most regions.

Adjusted product gross margin was 85.6% compared with 86.4% in the year-ago period. Research & development expenses were $1.1 billion, up 10% year over year. SG&A expenses were $1.3 billion, up 18.1%.

2022 Guidance Updated

Product sales are now projected between $24.5 billion and $25.0 billion (earlier projection- $23.8–$24.3 billion). Total product sales, excluding Veklury, are expected to be $22.0 billion to $22.5 billion (previous projection: $21.8–$22.3 billion). Total Veklury sales are now estimated at around $2.5 billion (earlier estimate: $2 billion). Earnings per share are expected in the range of $6.35-$6.75 (previous estimate: $6.20-$6.70). The Zacks Consensus Estimate for sales and earnings per share is pegged at $24.67 billion and $6.60, respectively.

Other Updates

The FDA has accepted the company’s new drug application (NDA) for experimental candidate lenacapavir. The company is seeking approval of lenacapavir, an investigational, long-acting HIV-1 capsid inhibitor, for treating heavily treatment-experienced (HTE) people with multi-drug-resistant (MDR) HIV-1 infection. The agency has set a target action date of Dec 27, 2022.

Gilead entered into a strategic research collaboration with Dragonfly to advance a number of novel natural killer cell engager-based immunotherapies for oncology and inflammation indications.  Per the terms, Gilead will receive an exclusive worldwide license for investigational DF7001 and options to license several additional NK cell engager programs.

 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates revision.

VGM Scores

At this time, Gilead has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Gilead has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.