Gilead Sciences Inc. (GILD Quick QuoteGILD - Free Report) is set to report first-quarter 2024 results on Apr 25, after market close. In the last reported quarter, the company posted an earnings surprise of -2.27%.

Factors to Note

Gilead has a market-leading HIV franchise, led by flagship HIV therapies — Biktarvy and Descovy. However, revenues in the first quarter might have been impacted by a decline in HIV franchise sales. The first quarter is typically impacted by the reset of patient copays and deductibles. In addition, inventory build-up in the fourth quarter leads to notable draw-downs by wholesalers in the first quarter, thereby impacting revenues. Gilead expects a 10-12% decline in HIV sales in the first quarter of 2024.

While market share gains and continued double-digit growth in demand for HIV prevention for Biktarvy drove sales in 2023, Biktarvy missed the consensus mark in the fourth quarter of 2023. The trend is likely to have continued in the first quarter. Descovy’s revenues, too, missed the consensus estimate in the previous quarter.  The top line is expected to have declined in the first quarter.

The first-quarter top-line estimate for Biktarvy and Descovy is pegged at $2.9 billion and $476 million, respectively, and our model estimate for the same is pinned at $2.8 billion and $460 million.

The Liver Disease portfolio sales include chronic hepatitis C virus, chronic hepatitis B virus and chronic hepatitis delta virus. Higher demand for chronic hepatitis delta virus products and chronic hepatitis B virus has likely boosted sales of this franchise in the first quarter. 

Veklury sales continue to be highly variable. Higher COVID-related hospitalizations in the fourth quarter enabled Veklury to beat on sales. However, the trend has likely not continued in the first quarter of 2024.

Cell Therapy product sales have likely seen a slight increase in the first quarter. Yescarta sales are primarily being driven by increased demand in the second and third-line settings for relapsed or refractory (R/R) large B-cell lymphoma outside the United States.

Tecartus (brexucabtagene autoleucel) sales are being driven by increased demand in adult R/R B-cell precursor acute lymphoblastic leukemia and mantle cell lymphoma. However, sales growth in the United States continues to be slower than anticipated, while that in Europe continues to be strong.

Both the Zacks Consensus Estimate and our estimate for Cell Therapy product sales in the first quarter are pinned at $473 million.

Increased sales of Trodelvy, indicating continued solid uptake in metastatic triple-negative breast cancer, have also likely boosted sales in the first quarter. Approval of the drug in Europe is also expected to have a positive impact on sales. The Zacks Consensus Estimate and our estimate for Trodelvy sales are pinned at $323 million and $314 million, respectively.

Operating expenses are likely to have remained flat sequentially in the first quarter due to a decline in the growth of R&D and SG&A expenses.

Pipeline & Regulatory Update

Apart from the regular top and bottom-line numbers, we expect investors to focus on key pipeline updates when the company reports first-quarter results.

Gilead recently acquired a clinical-stage biopharmaceutical company, CymaBay Therapeutics, Inc., for $4.3 billion. The acquisition added CymaBay’s investigational lead product candidate, seladelpar, to Gilead’s pipeline. Seladelpar is an investigational, oral, selective peroxisome proliferator-activated receptor delta agonist, shown to regulate critical metabolic and liver disease pathways. A new drug application seeking approval of the candidate for the treatment of primary biliary cholangitis (PBC) was submitted to the FDA in December 2023. The FDA granted priority review to the same with a target action date of Aug 14, 2024.

Earnings Surprise History

GILD’s earnings missed estimates in three of the trailing four quarters and beat the same in one, delivering an average negative surprise of 3.64%.

Share Price Performance

Gilead’s shares have lost 17.6% year to date compared with the industry's decline of 11%.

Image Source: Zacks Investment Research

What Our Model Predicts

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. That is not the case here, as you will see below.

Earnings ESP:  Earnings ESP for GILD is -89.07% as the Zacks Consensus Estimate is currently pinned at $1.03 per share and the Most Accurate Estimate is presently pegged at 11 cents per share. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.

Zacks Rank: The company currently carries a Zacks Rank #3.

Stocks to Consider

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

Oncolytics Biotech (ONCY Quick QuoteONCY - Free Report) has an Earnings ESP of +5.88% and a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

ONCY beat on earnings in three of the trailing four quarters and missed the same in one, delivering an average surprise of 5.20%.

Omega Therapeutics has an Earnings ESP of +7.25% and a Zacks Rank #2 at present.

OMGA beat on earnings in three of the trailing four quarters and missed the same in one, delivering an average surprise of 16.04%.

Fate Therapeutics (FATE Quick QuoteFATE - Free Report) has an Earnings ESP of +2.53% and a Zacks Rank #3 at present.

FATE beat on earnings in each of the trailing four quarters, delivering an average surprise of 28.86%. Shares of FATE have risen 28.1% in the past year.

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